In the context of the real estate market in many localities still struggling at the bottom, the recent sharp increase in apartment and land prices in Hanoi and some northern provinces and cities has surprised investors. However, when the person who won the auction for a land lot worth over 100 million VND/m2 in Thanh Oai (Hanoi) abandoned the deposit, many people realized that this was a trick of speculators.
Control the purchase and resale multiple times
In a document sent to localities last week, the Ministry of Construction stated that the real estate market has recently developed on an unsustainable trajectory and has many potential risks. Notably, some investors and brokers have spread rumors, bought and sold real estate, causing information confusion, in order to push up real estate prices for profit.
The ministry’s document mentioned the land auctions that caused a stir in public opinion in the suburbs of Hanoi. According to the agency, the record high winning prices, many times higher than the starting prices, have affected the socio-economic development and the healthy development of the real estate market.
To prevent the above situation, the Ministry of Construction requested the People's Committees of provinces and centrally-run cities to focus on implementing many tasks. These include inspecting and reviewing real estate business activities of enterprises, investors, trading floors, and brokers in the locality. In addition, the authorities need to control the buying and selling of real estate many times, especially in areas, projects, and apartment buildings with unusual price increases; inspect, examine, and take measures to correct acts of price inflation, price manipulation, and speculation; and handle violations of land laws, real estate business laws, and related laws.
As soon as the Ministry of Construction issued a written reminder, the People's Committee of Khanh Hoa province issued Official Dispatch No. 9648 assigning relevant agencies to review the organization of land use rights auctions in the area to ensure compliance with the law, publicity and transparency; promptly detect and strictly handle violations of legal regulations in land use rights auctions, especially acts of collusion to manipulate the market, inflate prices to create an unhealthy market, not true to reality for profiteering...
According to Mr. Tran Hoa Nam, Vice Chairman of Khanh Hoa Provincial People's Committee, to stabilize the local real estate market, the locality will continue to promote the development of social housing, effectively implement the project "Investing in the construction of at least one million social housing apartments for low-income people and industrial park workers in the period of 2021-2030" and effectively implement the "120,000 billion VND credit program".
Meanwhile, Mr. Le Quoc Thanh, Deputy Director of Khanh Hoa Province Department of Finance, said that in 2025, the province will auction 41 houses and land. These are land plots managed by the Development Investment Fund and the Urban Management Department of Ninh Hoa Town to generate revenue and supplement development resources.
In addition, Khanh Hoa province is also focusing on completing zoning plans (scale 1/2,000) in three important areas: Van Phong Economic Zone (part of Van Ninh district and Ninh Hoa town), Nha Trang city and Cam Lam new urban area. When the plan is completed, bidding and auctioning of new projects can be carried out.
Many brokerage services have appeared to sell land at auction in suburban districts of Hanoi. Photo: THUY LINH
Increased deposit and heavy fines
From the perspective of an industry insider, Mr. Le Dinh Chung, General Director of SGO Homes Real Estate Consulting and Development Joint Stock Company (Hanoi), said that to prevent speculative behavior and "price inflation", the State needs to redefine a suitable land price framework, currently the auction land price framework is lower than the market price.
Along with that, the deposit level should be raised to a higher level, which can be 10%-20% of the value of the land being auctioned to minimize investors speculating and inflating prices. In particular, for individuals who win the land price but then do not buy, Mr. Chung recommends lowering their credit score or not allowing them to participate in other land auctions. "Management of prices and auction methods is necessary," Mr. Chung emphasized.
According to Dr. Chau Hoang Than, Head of the Department of Administrative Law, Faculty of Law - Can Tho University, in order for land use rights auctions to be most effective, the decision to auction land must be made consistently by the provincial People's Committee, and the quantity and location of land plots and land lots must be reviewed and determined; a suitable auction plan must be developed to avoid "dripping" and creating scarcity. It is necessary to review, arrange and announce the list of land plots and land lots for effective auctions. In particular, the auction must avoid excess goods when announcing them en masse.
"We cannot hastily conclude that the auction results are many times higher than the starting price, such as the land auction in Hoai Duc district, Hanoi, which is unstable, but there is clearly price inflation in the area. As for the starting price being set too low, it may not reflect the true market price at the time of the auction," commented Dr. Chau Hoang Than.
From a legal perspective, lawyer Nguyen Phuong Lien, SENLAW Law Firm, suggested that to prevent price inflation and market instability, a starting price must be set in line with the market price. Because the starting price is the basis for calculating the deposit, and if the auction winner does not pay or does not pay the full amount of the auction winning price, the deposit will not be returned.
According to Lawyer Lien, although Decree 10/2023/ND-CP has stipulated to increase the deposit when participating in land auctions to 20% of the value of the land plot, the land area is calculated according to the starting price for auction (4 times higher than before), but because the starting price is low, it is not effective. "If the starting price is kept low, the deposit rate must be increased higher than the current 20%, because auction participants must be very financially ready.
In addition, another solution is to increase the administrative fine for the act of not signing a contract to buy and sell auctioned assets (abandoning the deposit). Currently, this act is only subject to a fine of 7 million VND to 10 million VND for individuals (according to Point c, Clause 1, Article 23, Decree 82/2020/ND-CP)" - Ms. Lien suggested.
Meanwhile, Dr. Ho Quoc Tuan, Lecturer - Director of the Master of Finance & Accounting training program at the University of Bristol, UK, cited international experience showing that the only tool to stabilize the real estate market is to build a reasonable tax on the principle that profits in real estate business are only equal to profits in goods and service business. From there, it is possible to prevent price inflation or virtual prices.
A land trading point right at the auctioned land plots in the suburbs of Hanoi. Photo: THUY LINH
Land fever is unlikely to occur
Mr. Bui Minh Thanh - Secretary of the Ben Cat City Party Committee, Binh Duong Province - said that recently there has been a local "land fever" in the area, mainly concentrated along the Saigon River such as An Tay, An Dien, Rach Bap wards... and the area along Ring Road 4. This is shown by the number of people coming to transact at bustling notary offices, while the budget revenue from land use fees has also increased more clearly than the same period.
However, Mr. Thanh said that thanks to the new Land Law, speculation and price inflation have significantly decreased. In addition, the locality also strictly manages land use planning, functional zoning, as well as actively propagating and disseminating information to the people about planning and real estate projects with clear legal status...
Mr. Nguyen Huu Nghia, Director of a real estate company in Binh Duong province, also acknowledged that if real estate "heats up" again, speculation and price inflation will not be as rampant as before, for two important reasons: the new Land Law has tightened land prices in each area, so it will limit the practice of "buying a 10 billion VND piece of land but declaring 100 million VND in tax"; secondly, the work of appraising land prices for bank loans has become much stricter.
Previously, the bank established its own appraisal unit, and sometimes the actual value of the land was lower than the appraisal bank. Now there is an independent appraisal unit, although not absolute, it will be stricter than before.
Publicize projects that are not eligible for trading
In Binh Thuan province, to prevent price speculation when the real estate market recovers, the Department of Construction has published a list of 33 real estate projects that are still not eligible for transactions, including 17 residential and urban area projects and 16 resort tourism projects, none of which are eligible for real estate business transactions according to regulations. Most of these projects are located in "golden land" locations in Phan Thiet City and neighboring districts and towns.
Previously, these 33 projects were "whistled" by the province because the investors and distributors of some real estate projects in Binh Thuan province carried out the sale and transfer of real estate through the forms of holding, reserving, and registering locations to collect money from buyers. While these forms are not regulated in the Housing Law, the Real Estate Business Law and related legal regulations.
Source: https://nld.com.vn/kip-thoi-ngan-chan-thoi-gia-nha-dat-196240916203716217.htm
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