Land recently auctioned in Thanh Cao, Thanh Oai, Hanoi. (Photo: Hung Vo/Vietnam+)
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On December 21, according to the Hanoi Department of Natural Resources and Environment, the revenue from land-use right auctions doubled compared to previous years (averaging nearly VND 10 trillion per year). However, there are still some pressing issues with the land-use right auction process.
Specifically, according to the report by the Hanoi Department of Natural Resources and Environment, in 2024, the Hanoi People’s Committee set a target of VND 25,105 billion for revenue from land-use right auctions in the socio-economic development plan and budget revenue estimate. As of November 2024, VND 18,599 billion has been collected (reaching 74.08% of the plan), and it is estimated to reach 100% of the plan by the end of 2024.
One limitation that has arisen is that according to Article 159 of the 2024 Land Law, the starting price for land-use right auctions, in the case of land plots that have been invested in technical infrastructure, shall be determined based on the land price framework. However, in some cases, the land price framework is lower than the market price and cannot cover the costs and resources invested in creating the land fund (including site clearance costs and infrastructure development costs).
To address this issue, the People’s Committees of districts, counties, and towns have set bid increments and multiple auction rounds (including mandatory rounds) to ensure that the starting price of the subsequent round after the mandatory rounds is close to the market price. However, the Land Law and the Asset Auction Law do not yet fully regulate certain aspects (such as the low deposit amount, which is only 20% of the starting price, and the lack of regulations prohibiting collusion to increase or inflate prices, with only bid-rigging prohibited).
As a result, in some cases, participants have bid higher than the market price to win the auction but then failed to pay the winning bid (forfeiting their deposit) or bid unusually high and did not continue bidding in the next round, causing the auction to be unsuccessful. This has led to “price manipulation” and “price inflation,” disrupting the market.
Additionally, there are no regulations requiring individuals who win land-use rights to complete the construction of their homes within a specified timeframe. This has resulted in land being left unused, causing difficulties in urban planning, affecting the aesthetics of the city, and wasting land resources.
Moreover, some districts, counties, and towns are still under pressure to generate revenue from land-use right auctions to meet the economic and social development needs, so they continue to organize auctions to allocate land for individuals to build houses.
In response to this situation, the Hanoi Department of Natural Resources and Environment shared that the Hanoi People’s Committee has directed localities to implement several solutions: Restrict auctions for allocating land to individuals for self-construction of houses; give priority to auctions of land-use rights for investment projects in housing development.
Localities are also updating and adjusting the land price framework (on December 6, 2024, the Department of Natural Resources and Environment submitted a proposal to the Hanoi People’s Committee to decide on adjusting and supplementing the land price framework within the city, effective from January 1, 2025, to December 31, 2025). The People’s Committees of districts, counties, and towns are strictly supervising the auction process and creating a public list of participants who bid unusually high but failed to pay the winning bid, causing market disruption.
The Hanoi People’s Committee has also requested the Hanoi Police to consider taking necessary measures to detect violations in the land-use right auction process. As a result, the Hanoi Police have taken action and temporarily detained five individuals who bid unusually high during an auction in Soc Son district.
Furthermore, the Hanoi People’s Committee has directed that auctions should not be organized for land plots with low starting prices that cannot cover the costs and resources invested in creating the land fund. Instead, these land plots should be used for resettlement areas to serve compensation, support, resettlement, and site clearance.
Hung Vo
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