Need to rectify land auction work
After a number of auctions with unusually large numbers of participants in rural areas of Nghe An, it is now the turn of the suburbs of Hanoi to witness strange signs in land auctions.
Information noise
First of all, it must be affirmed that the above land auctions were organized by localities in accordance with regulations, so the fact that there were many buyers and the auction prices increased compared to the starting price is a positive signal and brings a large source of revenue to the budget. However, recent developments in land auctions in rural areas are showing signs of instability.
The goal of planning, putting plots of land in rural areas into auction for land use rights is to create conditions for rural people to improve their housing. However, after the auctions, most of the plots of land put up for sale were bought by trading floors and investors from outside the area, making it inaccessible to local people, especially those with average incomes.
This reality happened at the land auction in early 2023 in Quynh Hung commune (Quynh Luu), when the district put 56 lots in the Dong Quan planning area up for auction, but only one household in Quynh Hung commune bid for 43 lots.
Similarly, in the auctions in Dien Hai, Dien Phuc (Dien Chau), Yen Son, Van Son (Do Luong), Xuan Lam, Xuan Hoa, Nam Thai (Nam Dan) and recently Hung Thong (Hung Nguyen), most of the land lots after the results were announced belonged to people outside the district. A resident who wanted to buy land in Van Son (Do Luong) commune said: "I know that buying it back is a few hundred million more expensive, but because I am not familiar with auctions, bidding low will not win, and bidding high will lose, so I have to buy land through a "broker".
Mr. Tran Doan Phu - Head of the Justice Department of Do Luong district said: The reason why land auctions in rural areas have been more or less affected is because of the recent participation of floors and professional investors. Currently, the regulations on low auction deposits and conditions and standards for participating in auctions have not restricted investors who have waived their deposits. Moreover, from August 1, 2024, many laws related to land and housing will take effect that many people do not fully understand, especially the provisions of the Real Estate Law listing a list of 105 urban areas that are not allowed to be divided into plots for sale, so they are more or less psychologically manipulated.
In addition, the auction regulations are quite open, just need to buy the documents and deposit from 10-20% of the starting price of the land lot, anyone can become an auction investor. The law does not stipulate how many land lots each individual can bid. After winning the auction, the deadline for payment is within 4 months. During that time, the auction winner can pay to buy the land or "surf" to make a profit...
In addition to the above reasons, through research, an official of the District People's Committee participating in supervising land auctions in Do Luong said: Like the land auction in Thu Thiem (Thu Duc City), in the area there are also a number of land lots that the trading floors accidentally bought a few years ago when the land price was at its peak, but before they could sell, the prices turned around and decreased. Therefore, now that neighboring planning areas are auctioned, they participate in the auction to push up the prices and create a new space for sale.
Early correction
Faced with the complicated developments of recent land auctions, Prime Minister Pham Minh Chinh has just signed and issued Official Dispatch No. 82/CD-TTg dated August 21, 2024, directing relevant agencies to promptly rectify the land use rights auction work. To improve the effectiveness and efficiency of land management, improve the real estate market, and promote socio-economic development, the Prime Minister also requested:
1. The Chairmen of the People's Committees of provinces and centrally run cities shall direct the relevant agencies and units to review the organization of land use rights auctions in their localities to ensure compliance with the law, publicity and transparency; promptly detect and strictly handle violations of legal regulations in land use rights auctions, and prevent acts of taking advantage of land use rights auctions for personal gain and causing market disruption.
2. The Minister of Natural Resources and Environment shall preside over and coordinate with the Ministers of Justice, Finance, Construction and the Chairmen of the People's Committees of provinces and centrally run cities to urgently review and inspect the organization of land use rights auctions in cases showing signs of abnormality, handle according to their authority violations of legal provisions on land use rights auctions, promptly detect inadequacies in legal provisions to advise and propose competent authorities to amend, adjust and supplement, prevent profiteering, and at the same time handle and propose solutions to strictly handle acts of taking advantage of land use rights auctions to disrupt the market, report to the Prime Minister before August 30, 2024.
3. The Minister of Construction shall preside over and coordinate with the Ministry of Natural Resources and Environment and the People's Committees of provinces and centrally-run cities to study and specifically assess the impacts of the recent land use rights auction results, especially cases with unusually high auction results, many times higher than the starting price, on the land and housing price level, on the housing and real estate market (supply and demand), proactively regulate and resolve according to authority and have effective solutions or propose solutions to limit negative impacts (if any), and report to the Prime Minister.
4. The competent authorities direct units and localities to strengthen their grasp of the situation, promptly detect, prevent and strictly handle violations of legal regulations in the auction of land use rights, especially acts of collusion to manipulate the market and inflate prices to create an unhealthy market that is not true to reality for profiteering.
5. The Ministers of Natural Resources and Environment, Construction, and Finance shall promptly guide and organize training for localities on new policies of the Land Law, Housing Law, Real Estate Business Law, and tasks directed by the Prime Minister in Official Dispatch No. 79/CD-TTg.
Analyzing the developments of land auctions in the suburbs of Hanoi, on many forums, experts and managers all said that, similar to the previous land auction in Thu Thiem Urban Area, the auctions in the suburbs of Hanoi are being controlled by speculators and floors to manipulate prices.
Therefore, it is hoped that the upcoming new Decree guiding the Law on Property Auction (which has been issued and will take effect from January 1, 2025) will need to stipulate that auction buyers must deposit 50% of the deposit and reduce the payment deadline after the auction to 1 month instead of 4 months as present.
The above solution will limit speculation and return the purpose of land auctions in rural areas to create conditions for local people to have more land for population dispersion, and for localities to have resources for socio-economic development.
In addition, according to the representative of the Property Auction Service Center (Nghe An Department of Justice) and representatives of some localities, it is also recommended that the upcoming Decree guiding the Law on Property Auction should have clear regulations, in the direction that anyone who abandons their deposit will be banned from participating in land auctions for a certain period of time from 2 to 5 years to make the market healthy.
An expert in housing and real estate management recommends that there should be a binding regulation according to which auctioned land lots can only be transferred after 2-3 years. If anyone transfers the land immediately after the auction and makes a profit, they must pay all income taxes and fees as prescribed...