Limiting 'brokers' from land auctions by indirect voting

Limit land brokers

Attending the auction of 15 residential land lots in Hau Thanh commune (Yen Thanh) at the end of July 2019, it was clear that there was no more jostling or "land brokers" causing chaos; nor was there any police force having to protect the inner and outer rings like in previous auctions.

Under the close supervision of the District Supervisory Board, the auction was conducted publicly, transparently, and in accordance with the law. After only 2 hours, 15/15 plots of land in Hau Thanh commune were successfully auctioned, the highest plot costing over 1.302 billion VND, the lowest plot costing 381 million VND. The total amount collected was 8.339 billion VND, higher than the starting price of 4.338 billion VND.

Mr. Nguyen Van Thanh, a local resident, said: “After receiving the ballot, I filled in the information about the price and lot number. Then, I put it in an envelope and signed over the edge to “seal” it and put it in the ballot box to wait for announcement. I find that with this method, buyers feel more comfortable and do not have to endure pressure from “brokers” like before.”

Land auctions by indirect voting took place orderly in localities. Photo: Archive

According to the representative of the Yen Thanh District Supervisory Board: Originally a hot spot in land auctions due to the situation of brokers colluding, lowering prices, causing disorder, anger among the people and budget losses, the district was chosen by the province as a point in changing the auction form from direct to indirect voting. This new form of land auction has brought good results, the money coming into the budget has increased and land has reached the hands of people in need; the situation of land brokers soliciting and forcing people has decreased significantly.

Not among the selected localities, Nghi Loc district still implemented a pilot land auction by indirect voting. In August 2019, Nghi Loc district People's Committee coordinated to organize a land auction by secret ballot for 12 plots of land in hamlets 6 and 7, Nghi Thinh commune. This is the first auction in the new form to be held in the area.

There were 26 registered applications for the auction. Accordingly, in just one session, 10/12 of the above land lots were successfully auctioned. The highest lot cost more than 1.8 billion VND, the lowest lot cost 800 million VND (there were 2 lots that were not eligible for auction because there was only 1 application). The locality collected more than 16.72 billion VND for the budget from the auction of the 10 above land lots.

According to the statistics compiled by the Department of Justice, in Official Dispatch No. 8443/UBND-NC, dated November 2, 2018, the Provincial People's Committee selected 6 units, including Vinh City, Dien Chau District, Quynh Luu, Nam Dan, Yen Thanh and Hoang Mai Town to pilot the application of indirect voting auction in land use rights auction. In addition, 5 units have applied the indirect voting auction in land use rights auction, namely Hung Nguyen, Nghi Loc, Thanh Chuong, Do Luong and Cua Lo Town.

As a result, in the first 9 months of 2019, the above units signed 77 land use rights auction service contracts, applying the form of auction by indirect voting, with a total starting price of 620,510,093,985 VND, the winning auction price was 709,327,100,482 VND, a difference of 169,781,006,487 VND, exceeding 27.36% compared to the starting price.

According to the general assessment, the effectiveness of indirect auctions is high, the average winning price exceeds the high starting price (27.36%). It is worth mentioning that the security and order situation at the auctions is stable, there is almost no collusion or negotiation between auction participants and the phenomenon of "auction brokers" and "gangsters" disturbing order at auctions, interfering, threatening, and oppressing auction participants. From there, it helps people with real land needs to be able to buy land without pressure or having to go through any other intermediaries.

Dien Chau District Police successfully broke Project 1217G, summoning 13 subjects from 2 groups of land brokers at the end of 2018. Photo: Mai Giang

Reflecting to the Legal Committee of the Provincial People's Council at the supervision of land use rights auctions in October, a representative of the People's Committee of Cua Lo town said that from January 2018 to September 2019, Cua Lo town successfully organized 17 land auctions, including 15 direct auctions and 2 indirect auctions. The total number of successful auctions was 268 land lots with the winning auction price of more than 214.3 billion VND, an increase of 15.7% compared to the starting price.

According to Mr. Vo Van Hung - Vice Chairman of the People's Committee of Cua Lo town: "Organizing land auctions in the form of direct auctions attracts many participants, creating excitement and the auction process has land lots increasing after 2-3 rounds and increasing the auction value higher than the starting price. However, the limitation of direct auctions is that it cannot "filter out" "green troops", people who do not need to buy land also participate in land auctions, distorting the market and causing chaos in security and order.

From that practice, the town has piloted two indirect auctions, which initially showed that it has limited "brokers" and people who want to buy land can determine their own ability to participate, and whoever bids the highest will win.

Overcoming shortcomings and limitations

Although indirect land auction is a form with many advantages compared to direct auction, the implementation process still reveals some limitations. Specifically, due to its new implementation, property auction organizations still lack experience in handling some situations during the process of receiving documents and announcing auction results. Most people do not grasp the market price, so it is difficult to determine the price to pay to win the auction.

It is worth mentioning that the auction organization is responsible for selling auction participation documents and securing information of auction participants, so it is difficult to monitor the confidentiality of information from these organizations. In fact, due to the regulation that land auction participants must register with the auction organization which land lot they will bid on before voting, it unintentionally creates loopholes for "land brokers" to know and bargain and arrange with buyers.

Among the 11 units implementing the indirect auction method, most of them have auction winning results higher than the starting price. However, there are 3 units including Thanh Chuong, Quynh Luu, and Hoang Mai TX where the auction winning price does not increase much compared to the starting price (5.42% - 7.53%). Many opinions say that this situation is not normal. Although it is not possible to conclude whether there is a settlement or not, if this situation continues, the purpose of limiting "land brokers" will not be completely resolved...

Customers check the sealed ballot boxes and envelopes after the ballot boxes are opened at the land auction in Hau Thanh commune (Yen Thanh). Photo courtesy of Thai Duong

Talking to us, Ms. Nguyen Thi Que Anh - Deputy Director of the Department of Justice said: "The form of land auction by indirect voting initially shows that, in addition to the winning auction price exceeding the high starting price, the phenomenon of "land brokers" running rampant and causing chaos at auctions in localities has decreased significantly, people who want to buy land have bought the land they need.

However, because the form of indirect land auction by secret ballot has just been implemented, it is difficult to avoid some problems arising. Therefore, in the coming time, along with continuing to implement in selected pilot localities, as well as in many other districts, cities and towns, on the basis of comments from localities, relevant departments and branches will collect and study to continue to improve.