National Assembly delegate Duong Van Phuoc (Quang Nam delegation) is concerned that the situation of land auctions "all night long" in Hanoi to push up prices and then cancel deposits will cause market manipulation.
On the morning of October 28, while giving opinions on the results of monitoring the implementation of policies and laws on real estate market management, many National Assembly deputies were concerned about the issue of land auctions in some localities with sky-high prices but then deposits were abandoned.
Bidders must prove they have enough money to buy the land.
Delegate Nguyen Thi Thuy (Bac Kan delegation) pointed out that land auctions in suburban districts of Hanoi are “hotter than ever”. With auctions going on all night, hundreds or even thousands of people are willing to “wait and see” to bid for record-high land prices.
“Land prices in suburban districts are up to more than 100 million VND/m2, equivalent to land in projects with invested infrastructure. Land prices in some localities are constantly setting new levels, far exceeding people's incomes,” Ms. Thuy said.
Delegate Hoang Van Cuong (Hanoi delegation) said that to prevent the situation of abandoning deposits after the auction, increasing the deposit is not a feasible solution, because this will limit the number of participants and reduce competition.
According to Mr. Cuong, it is necessary to issue regulations that auction participants must prove that they have enough money to buy if they win the auction, by confirming their bank deposit account or other collateral assets such as real estate; they must commit that if they intentionally default on their deposit, the above assets will be frozen for processing.
If there is such a regulation, those who have a real need to buy will easily be able to prove this. At the same time, the regulation will help eliminate individuals who have no need to use, participate in auctions just to buy and resell, or those who intentionally bid high and then abandon the deposit as has happened in the past.
Large deposits will limit bidders
Delegate Duong Van Phuoc (Quang Nam delegation) debated with delegate Hoang Van Cuong's view that the deposit cannot be increased. Mr. Phuoc cited the reality of the auction of a sand mine in Quang Nam, with a starting price of over 1 billion VND, but after 200 rounds of bidding, the price jumped to 375 billion VND. According to regulations, the price of sand is 150,000 VND/m3, but after the auction, the price increased to 2.3 million VND/m3.
Mr. Phuoc said that the goal of the auction participants is to win at all costs, in order to be able to cancel the deposit. He pointed out that this situation shows that businesses are monopolizing and driving up prices, causing difficulties for people and businesses, and directly affecting public investment projects in Quang Nam.
From the above evidence, Mr. Phuoc also mentioned the reality in Hanoi, many land auctions "last all night long", specifically the one in Ha Dong district. Through this auction, the highest land price recorded was up to 262 million VND/m2. The delegate said that there were signs of irregularities here, leading to the risk of paying high prices and then abandoning the deposit.
The Quang Nam delegation cited a report from the Ministry of Natural Resources and Environment after inspecting land auctions in Thanh Oai district, finding that 56/58 lots had high winning bids. The winning bidders showed signs of abandoning their deposits after the auction. “Auctions without substance will become a tool to manipulate the market,” said delegate Phuoc.
From there, delegates proposed increasing the deposit price and increasing the progressive deposit amount for each round and having strong sanctions to prohibit these cases.
Explaining further about the proposal not to increase the deposit fee but to implement additional conditions for auction participants, delegate Hoang Van Cuong (Hanoi delegation) said that according to regulations, the deposit fee is 5-20%.
Mr. Cuong gave an example of real estate with a starting price of 10 billion VND, deposit of 2 billion VND. Not everyone who participates in the auction will be able to buy, maybe out of 10 people participating, only 1 person will buy.
Therefore, many people find that they have to put down a large deposit without being sure of buying. The cost of putting up a deposit has hindered the economic calculation, so few people participate in the auction.
However, Mr. Cuong said that it is necessary to increase the conditions for auction participants through real estate assets, or bank money... Thus, it is proposed that if the deposit is abandoned, the existing assets, equivalent to the auction value, will be processed.
Mr. Cuong affirmed that if this regulation is applied, it will benefit those who do not have money to participate in auctions with the sole purpose of buying and then reselling, they will not be eligible to prove their participation, those who actually buy will be able to prove it.
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