The Ho Chi Minh City Real Estate Association (HoREA) has submitted feedback on the draft Government Resolution addressing land use rights auction bottlenecks. They advocate for stricter deposit regulations and increased penalties for winning bidders who default.
HoREA deems the draft’s Article 2, stipulating a minimum 20% and maximum 50% deposit of the starting price, essential. This replaces the previous 10-20% range. Higher deposits will filter out speculative participants, curbing individuals or entities without genuine intent who aim to hoard land or profit unfairly. HoREA highlights that the current low threshold has led to auction cancellations and market distortions.
With elevated deposits, only financially capable investors will participate. Winning bidders’ deposits convert to down payments, while non-winners receive refunds within three days post-auction.
A resettlement project in Thu Thiem New Urban Area slated for auction
Notably, HoREA proposes stringent penalties for defaulting winners. Le Hoang Chau, HoREA Chairman, suggests forfeiting their entire deposit or down payment, plus compensating auction and service fees. Administrative fines under judicial support regulations would also apply.
“The draft lacks comprehensive violation coverage, especially for defaulting winners causing result cancellations. Current compensations are insufficiently deterrent. Only forfeiting the full deposit and imposing additional penalties will curb phantom bidding,” Chau emphasized.
HoREA also recommends extending auction bans to businesses with payment defaults or forfeitures, not just individuals as drafted. This broader scope deters large firms from violations, while smaller entities might evade bans by creating new legal entities.
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