The Ministry of Justice has just held a meeting to give opinions on the draft Resolution of the Government regulating the handling of difficulties and problems in property auction activities.
The draft has raised the deposit to participate in the auction and added some sanctions for cases of winning and then abandoning the deposit. According to the draft, in cases of land allocation to individuals, land lease for projects, the deposit for participating in land use rights auctions is a maximum of 50% of the starting price and a minimum of 10%.
Speaking with Lao Dong, lawyer, Master Pham Thanh Tuan - Hanoi Bar Association, real estate legal expert - said that the current Law on Property Auction (Article9) stipulates a deposit of at least 10% and a maximum of 20% of the starting price for auctioning land use rights to implement investment projects; for auctioning residential land for individuals, the deposit level is at least 5% and a maximum of 20%. According to Article 55 of Decree 102/2024/ND-CP, the deposit before participating in the auction of land use rights is fixed at 20% of the total value of the land plot calculated according to the starting price.
Meanwhile, the draft raises the minimum to 10% and the maximum to 50% of the starting price. This means that the deposit rate can increase by 2.5 times compared to the current price, up to 50% of the starting price, which is considered very high compared to current practice.
According to lawyer Pham Thanh Tuan, increasing the deposit ratio means limiting the situation of deposit cancellation, forcing participants to carefully consider their financial capacity. However, there are still unreasonable points that need to be considered.
First of all, the draft does not distinguish between individuals and businesses. For individuals participating in land auctions, the value of land plots is often not too high (under 5 billion VND), so raising the deposit from 20% to a maximum of 50% can be considered. However, for businesses participating in investment project auctions, especially commercial housing projects with starting prices of hundreds and thousands of billions of VND, if the deposit level is applied up to 50%, it will reduce competition, eliminating many small and medium-sized enterprises, even large enterprises if they do not have time to prepare capital.
In fact, land use fees often account for a very large proportion of total investment, while current laws only require businesses with equity of 20% - 25%, the rest must mainly be mobilized from credit after winning the auction. Therefore, according to lawyer Tuan, it is necessary to clearly distinguish according to subjects: for individuals, the deposit rate can be increased to deter, but for businesses, the fixed rate of 20% should be kept to ensure feasibility and healthy competition.
Another problem is that the range ranges from 10% to 50% is too large, posing a potential risk of inequality between localities if there is a lack of detailed and transparent guidance. In reality, it is possible that many localities apply the 50% ceiling to increase bottlenecks, leading to very few people participating in auctions or only a few large enterprises, easily emerging monopoly or collusion. Therefore, there should be specific criteria to determine the rate instead of giving full authority to the locality.
A new content in the draft is a regulation on compensation for costs when "having a good price but abandoning the deposit". According to the current Law on Property Auction (Article 73), violators must only compensate for damages according to the provisions of law in cases of canceling auction results due to violation of procedures, collusion, price suppression, or price increase. The law does not stipulate the payment of expenses that property owners and auction organizers have spent to organize the auction.
This draft adds a provision that those who violate payment obligations, leading to the cancellation of auction results, must fully pay the organization costs and related costs. It can be understood that in the case of winning the price but abandoning the deposit, the violator not only loses the deposit but also has to compensate for all costs of organizing the auction. This is considered a strong deterrent.
Real estate legal expert Pham Thanh Tuan believes that this regulation is reasonable and has high deterrence, because in many large auctions, the cost of organization can be very large, even exceeding the deposit. The regulation will force participants to be more serious and responsible, avoiding the situation of considering auctions as a "game" and then abandoning deposits as has happened in the past.
