The Hanoi People's Committee has just sent a document to departments, branches, districts, towns and cities regarding the auction of land use rights. Accordingly, the Hanoi People's Committee requested the district-level People's Committees to make a list of cases where people paid higher prices than the market price to win the auction but did not pay according to regulations, causing market disruption.
This list will be made public on the websites of the districts and the Department of Natural Resources and Environment.
Hanoi City directs units to continue perfecting regulations, including limiting the organization of auctions to allocate land to individuals for self-construction of houses.
At the same time, instruct the People's Committees of districts and towns to take measures to prevent violations of auction regulations from continuing to participate in auctions.
Commenting on this issue, Ths. Nguyen Van Dinh - Real estate legal expert said that winning a land auction and then forfeiting the deposit is not a crime, not an illegal act. But it can be an initial sign of a crime or another illegal act.
“If the land auction is due to a plot to inflate prices and manipulate the market, the investigation agency will consider that specific act, not the act of deposit cancellation. That is, deposit cancellation can be a sign of a certain violation of the law, but if the deposit cancellation is only because the buyer no longer wants to buy, without any other plot, then that is a normal act, not a violation of the law.
The only sanctions that can be applied are to confiscate the deposit without returning it, or as Hanoi has just directed, to publicly disclose the identity of the person who bid higher than the market price to win the auction but did not pay the money," Mr. Dinh analyzed.
According to Mr. Dinh, the nature of the land auction tool is to create housing for people due to natural population growth. However, in many land auctions in recent times, the winners are mainly not local people. Typically, in the recent auction of 68 land lots in Thanh Oai, only 2 local people won the auction, the rest were investors from other places.
Land auction tools have therefore transformed into a game for investors who have no real housing needs but mainly participate in auctions to almost immediately transfer ownership and make a profit.
Experts assess that Hanoi's restriction on organizing auctions to allocate land to individuals to build their own houses; prioritizing land auctions with collection of land use fees and land leases to organizations to implement investment projects is reasonable. Because auctions according to new projects can synchronously invest in infrastructure and overcome the phenomenon of land speculation and hoarding.
During previous land auction "fever", some experts and associations proposed to only allow local people to auction land plots, and only if local people did not participate would others be allowed to participate.
According to Mr. Dinh, this is not a fundamental, radical solution because investors may "borrow the names" of local people to participate in the auction, or local people themselves may become investors participating in the auction to sell for profit.
“But this solution can be completely completed by other supporting measures, such as regulations to prevent land transfer transactions after winning the auction for a period of time, for example 5 years. Or handling it with tax policy, if the auction winner transfers land within a short period of time, such as within 12 months, he will have to pay a high tax rate,” Mr. Dinh commented.
However, this expert also believes that this is a short-term solution, applicable to land auctions. In the long term, the expert believes that a universal, comprehensive solution must be implemented, which is to tax real estate to combat speculation.
