Need to strictly punish cases of deposit abandonment after winning land auction

On October 28, expressing opinions on the results of monitoring the implementation of policies and laws on real estate market management, National Assembly deputies proposed many solutions to handle the situation of abandoning deposits after winning land auctions, and emphasized the need to strictly punish these cases to avoid profiteering and market manipulation.

Delegate Duong Van Phuoc ( Quang Nam delegation). (Photo: DUY LINH)

Proposal to increase progressive deposit for each round

Debate with the viewpoint of delegate Hoang Van Cuong ( Hanoi delegation) about the impossibility of increasing the deposit, delegate Duong Van Phuoc (Quang Nam delegation) pointed out the reality of the auction of a sand mine in Quang Nam, with a starting price of more than 1 billion VND, but after 200 rounds of auction, the price jumped to 375 billion VND. The regulated price of sand is 150 thousand VND/m3, but after the auction it increased to 2.3 million VND/m3.

The delegate said that the goal of the participants in the above auction was to win at all costs and then... abandon stake, aimed at monopolizing, monopolizing and pushing up prices.

“The law stipulates that only 20% of the starting price is set, meaning that if we set a starting price of 1.8 billion VND, the deposit is only 200 million VND. If we pay 200 million VND and achieve our goal, the enterprise is willing to forfeit the deposit to achieve the intention of monopoly, monopolization and raise the price, causing difficulties for people and enterprises,” the delegate analyzed.

Sand prices have been pushed up very high, and this has directly affected all public investment projects in Quang Nam. Many projects in other places and people have encountered many difficulties in purchasing these common construction materials.

Continuing the above evidence, delegate Duong Van Phuoc also pointed out the reality in Hanoi, many land auctions "last all night long", specifically the one in Ha Dong district recorded an auction price of 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.

Delegates attending the meeting on the morning of October 28. (Photo: DUY LINH)

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 won high prices. The winning bidders showed signs of abandoning their deposits after the auction. “Auctions without substance will become a tool for manipulation, the trading market will become a place for profiteering, and we need to severely punish them,” said delegate Phuoc.

To avoid “bidding bandits”, delegates proposed to increase the deposit price and increase the deposit progressively with each round to force bidders to consider when intending to withdraw their deposit. Along with that, there should be strong sanctions to prohibit businesses that withdraw their deposit from continuing to bid in various fields. “For example, in the auction of construction materials, we will not allow them to bid anymore, only then can we limit these cases”.

Handling auction winners who deposit assets equivalent to the auction value

Previously, speaking at the meeting, delegate Hoang Van Cuong (Hanoi delegation) said that the deposit should not be increased, because if it is increased, it will limit the number of people participating in the auction, causing a loss of competitiveness. Instead, it is necessary to add more conditions for the auction participants.

The delegate analyzed that the deposit fee is currently regulated from 5 to 20%, for example, with a real estate initially priced at 10 billion VND, the deposit will be 2 billion VND and not everyone participating in the auction can buy that real estate immediately, but out of 10 participants, only 1 person can buy.

Thus, many people find that they have to put in a large deposit without being sure that they will be able to buy, so the cost of putting in the deposit naturally creates a psychological barrier, an obstacle in economic calculation, so very few people will participate in registering to buy.

Delegate Hoang Van Cuong (Hanoi delegation). (Photo: DUY LINH)

On that basis, delegate Cuong said that the deposit should not be increased, but it is necessary to stipulate additional conditions that auction participants must meet.

Specifically, auction participants must prove that they have sufficient financial capacity to purchase the auctioned property, through real estate assets or bank deposits. If they win the auction but forfeit their deposit, they will be dealt with by having assets equivalent to the auction value. "At that time, you can bid as high as you want, but if you forfeit your bid, your bank account and red book will be taken to court and frozen for handling," the delegate further clarified.

By applying this regulation, those who do not have money but participate in the auction with the sole purpose of buying and then reselling will not have enough conditions to prove and will not be able to participate, and those who really want to buy this real estate for their own use will be able to prove it immediately.

The Hanoi delegation affirmed that the above measures will help filter out bidders who are really interested in buying, and especially those who pay high prices and then abandon their deposits will certainly have their assets handled with a very large value, thereby preventing the abandonment of deposits like in the recent past.

“Proving financial capacity is done when submitting documents, not when we start the auction. Thus, we have enough conditions and time for participants to prepare and for the auction management agency to control,” the delegate added.

Delegate Cuong also expressed his agreement with delegate Duong Van Phuoc's view on strictly handling cases of paying high prices and then abandoning deposits.

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