Currently, the Department of Natural Resources and Environment of Ho Chi Minh City has been completing the stages in the auction process such as: auction plan, auction time, and determining the starting price.
According to lawyer Tran Manh Cuong (Ho Chi Minh City Bar Association), Decree 12 amending and supplementing Decree 44 on land prices issued on February 5 has added specific regulations on methods for determining land prices, conditions of application, procedures, and contents of determining land prices according to different methods. Thus, the determination of the starting price for auctions is clearly, specifically, and transparently regulated. The remaining issue is to specify the criteria for selecting investors with potential and real interest.
To do this, lawyer Tran Manh Cuong noted, it is necessary to consider the criteria of business performance in recent years, the time of operation of the enterprise, total capital, the number of real estate projects that have been implemented. Next is the ability to implement the project. It is possible to screen by reviewing their proposed development plan on the land participating in the auction, such as conditions on equity, capital arrangement plan for land use fee payment, and the ability to mobilize capital for project development. In addition, it is necessary to study the feasibility of the business and development plan. This screening helps to avoid units that are likely to disrupt the market.
Thousands of apartments and many plots of land in Thu Thiem will continue to be auctioned.
Mr. Troy Griffiths, Deputy General Director of Savills Vietnam, analyzed that the starting price is often determined based on the surplus method. This method estimates the total development cost based on the land use coefficient, construction density, and maximum number of floors of the project according to the approved planning. However, in reality, this planning parameter is not necessarily the most effective and market-appropriate land use plan. For example, plots of land with commercial areas such as offices or hotels are too high in areas where these two types of development are not developed.
Therefore, when determining land prices, there may be a difference between the starting price and the market price that investors can bid. This leads to the possibility of the auction failing, because the starting price is not attractive to investors. There needs to be appropriate planning and a reasonable starting price. In addition to the managing unit and competent state agencies, there needs to be the participation of specialized consulting units (planning and market) that understand development.
Regarding the deposit amount when auctioning land, according to the current Law on Property Auction, at Clause 1, Article 39, the deposit amount is agreed upon by the property auction organization and the person owning the auctioned property, but is at least 5% and at most 20% of the starting price of the auctioned property. Meanwhile, Decree 10 stipulates that organizations participating in the auction of land use rights must deposit an amount equal to 20% of the starting price, this provision has been applied since May 20, 2023.
The Land Law regulates bidding according to the provisions of the Law on Property Auctions. Therefore, to limit the situation of exploiting auctions to disrupt the market and make profits, it is possible to consider raising the minimum deposit rate to 10%, instead of 5% when auctioning land use rights. There should also be additional regulations on sanctions for cases of winning the auction but abandoning the deposit.
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