HoREA: Many loopholes in Thu Thiem land auction 7
In a report just sent to the Government assessing the impact of the Thu Thiem land auction, the Ho Chi Minh City Real Estate Association (HoREA) warned that current legal regulations on bidding for land use rights still have many loopholes.
The first loophole is that the maximum deposit is only 20% of the starting price of the auctioned asset, but there is no requirement that the investor must pay more, or must commit to additional payment or have a payment guarantee from the organization.
HoREA believes that this is a worrying shortcoming because in fact there have been a number of cases where investors who won the auction paid a deposit many times less than the winning amount but then did not pay the winning amount.
With recent auctions of very valuable assets such as 4 plots of land in Thu Thiem New Urban Area, Viet Star Company won the auction of plot 3.12 with a pre-order of 588.4 billion VND, but the winning price was
HoREA proposed that the Government consult experience in managing stock transactions applied to land auctions.
The second loophole is that the process of evaluating the capacity of investors participating in the auction is still lax.
Due to the lack of regulations for this activity, the Asset Auction Service Center under the Department of Justice of Ho Chi Minh City has issued Auction Regulations, requiring investors to commit in writing not to violate legal regulations.
Thu Thiem Peninsula in May 2021.
The third loophole, sanctions for delay in putting land into use, is not enough of a deterrent.
HoREA recommends that in cases where land is allocated or leased by the State to implement an investment project but is not used for 12 consecutive months or the land use progress is 24 months late from the actual handover of land.
In case the land is not put into use, the investor is given a 24-month extension and must pay the State an amount corresponding to the land use fee and land rent with the corresponding delay period.
The fourth loophole is that the methods for determining `specific land prices` as a basis for calculating `starting prices` for land use rights auctions still have many shortcomings, still not ensuring the principle of `consistency with common land prices`.
The auction of land lot 23 Le Duan, District 1, Ho Chi Minh City in 2014 had a `starting price` of VND 550 billion, but the winning price was up to VND 1,430 billion, 2.6 times the `starting price`.
The recent auctions of 4 Thu Thiem land plots further showed the inadequacies of land valuation methods to determine the starting price for land use rights auctions, which are very low compared to the winning land price.
The auction of 4 plots of land in Thu Thiem New Urban Area (Thu Duc City) on December 10 caused the market to `stir up` when it collected 37,346 billion VND, 7 times higher than the starting price.
Last week, Prime Minister Pham Minh Chinh requested to check auction cases showing unusual signs and review banks’ credit granting to real estate investors participating in auctions.
