Minister of Justice: To carry out research and supplementation of regulations related to “deposit” in auctions for land use right

Proposed deposit level ranging from 10% to 50% of the reserve price

According to the report of the Department of Judicial Support, in implementing the instructions of the General Secretary and the Official Letter of the Party Committee Office of the Government concerning the results of regular supervision and monitoring of land use right auctions in recent times, as well as synthesizing proposals and recommendations for the future, the Ministry of Justice is responsible for improving the institutional framework on the following groups of issues and tasks: (1) to immediately study and amend the provision raising the advance deposit of individuals participating in auctions from a maximum of 20% to 50%; (2) to supplement sanctions providing for a temporary ban or a permanent ban on participation in auctions (in cases of forfeiture of deposit for the second time or more); and to consider criminal liability for cases where the winning bidder forfeits the deposit; (3) to increase the level of administrative penalties or pursue criminal liability in cases of other violations in the course of auction participation (bid rigging, use of shill bidders, price suppression, refusal to bid, or fraudulent price escalation).

Practical experience in recent times has shown instances of abuse of asset auction activities, whereby bidders submit abnormally high bids and subsequently fail to pay the winning amount (“deposit forfeiture”), as well as cases of bid rigging, price suppression, or price manipulation in land use right auctions in certain localities for illicit gain. Such practices adversely affect the healthy development of the real estate market, pose numerous risks to social security and public order, and negatively impact socio-economic development as well as the investment and business environment.

The above situation arises from several main causes, such as: the reserve price being lower than the market price, resulting in a low deposit for auction participation (maximum 20%), which has led to many individuals and investors with no real need for land use also participating in auctions for the purpose of seeking profit; the low reserve price leading to winning bids 20–30 times higher than the reserve price; the relatively long period allowed for payment of the winning bid amount, which is another reason why many individuals and investors participate in auctions to seek profit; the scarcity of land plots in Hanoi causing sudden spikes in land prices; and certain individuals and organizations intentionally “inflating prices” in auctions for profiteering purposes.

Therefore, it is necessary to promulgate regulations to promptly address this situation, thereby contributing to the unlocking of land resources and effectively serving socio-economic development. In the context where the National Assembly has issued Resolution No. 206/2025/QH15 on a special mechanism for addressing difficulties and obstacles arising from legal provisions, the drafting of a Government Resolution on addressing difficulties and obstacles in asset auction activities is aimed at promptly overcoming such challenges, unlocking resources in land use right auctions, and effectively serving state management as well as socio-economic development.

The draft Resolution stipulates that, in cases of allocation of residential land to individuals or allocation/lease of land for the implementation of investment projects, the advance deposit for participation in land use right auctions shall be no less than 10% and no more than 50% of the reserve price.

With respect to violations by winning bidders of land use rights in cases of land allocation or land lease, the draft Resolution specifies: A winning bidder of land use rights in the case of residential land allocation to individuals who fails to fulfill the obligation to pay the winning bid, resulting in the revocation of the decision recognizing the auction results, shall, depending on the nature and seriousness of the violation, be prohibited from participating in land use right auctions for residential land allocation for a period of between six months and five years. A winning bidder of land use rights in cases of land allocation or land lease who fails to fulfill the obligation to pay the winning bid, resulting in the revocation of the decision recognizing the auction results, shall, in addition to being prohibited from participating in auctions, also be responsible for fully paying the costs of organizing the auction, the asset auction service fees, and other related expenses of that auction, as notified by the competent authority approving the results of the land use right auction…

It is necessary to ensure practical applicability and effectiveness in state management.

At the meeting, Deputy Minister Nguyen Thanh Tu stated that the proposal to impose a ban on participation in auctions for a period of six months to five years should be carefully considered, as Article 70 of the current Law on Asset Auctions only applies the sanction of prohibition in cases related to investment projects and mineral exploitation. In addition, raising the deposit level to as much as 50% is regarded as a very strong deterrent measure. Participants will not dare to forfeit the deposit because it would mean losing a very large amount of money. Therefore, the addition of a penalty of prohibition from participation is deemed unnecessary.

With respect to fees and deposits, Deputy Minister Nguyen Thanh Tu once again emphasized that when there is already a regulation on high deposits and forfeiture in cases of default, the collection of additional fees has little value and only complicates the matter. The Deputy Minister concurred that raising the minimum deposit level from 20% to 50% is reasonable and sufficiently deterrent.

Deputy Minister Phan Chi Hieu agreed that the regulation prohibiting bidders who forfeit their deposits from participating in auctions should not be expanded, given that the current Law only applies such prohibition in two narrow fields, namely investment projects and mineral exploitation. However, Deputy Minister Phan Chi Hieu expressed concern about the proposal to raise the maximum deposit level to 50%. He stated that if this level were applied, localities would tend to impose the ceiling rate, leading to the consequence that either no participants would join the auctions or only large enterprises specializing in auctions for resale would take part, which could exacerbate profiteering.

According to Deputy Minister Phan Chi Hieu, the main reason for forfeiting deposits is that the reserve price is far lower than the market price; therefore, he proposed focusing on setting reserve prices closer to market value. In that case, a 20% deposit would already constitute a very substantial amount that no one would dare to forfeit. At the same time, he suggested that the regulations on deposits should be reasonable and flexible, and that the authority to determine specific deposit levels should be vested in the asset owner. He also recommended studying the application of supplementary remedies under civil law, such as compensation for damages and payment of arising expenses, in order to increase the responsibility of winning bidders.

With respect to the scope of the draft, Minister Nguyen Hai Ninh concurred that the draft Resolution should focus solely on addressing and resolving difficulties and obstacles in the practical implementation of land use right auctions, thereby facilitating transparent participation and limiting negative practices, abuse, and profiteering. The Minister requested a thorough review of the difficulties and obstacles arising both in practice and from legal provisions, in order to propose concrete solutions and regulations in the draft Resolution. These should reflect the spirit and objectives of the higher-level directives, but in terms of legal and technical design, responsibility and initiative must be exercised to justify any points that may be considered unreasonable.

It should be noted that the Law on Tax Administration is currently under amendment and is expected to take effect on July 1, 2026. The Minister requested that, in the process of drafting and designing tax law provisions, full consideration be given to the practical issues arising, and that an earlier effective date may be considered to meet management requirements. At the same time, provisions should be supplemented concerning deposits, tax payment deadlines, compensation mechanisms, and the handling of real estate investment projects, in order to ensure feasibility and fairness. With respect to deposits, the Minister emphasized that the specific level shall be determined by the asset-owning entities.

The Minister instructed a review of all contents in order to promptly finalize the draft Resolution on the basis of fully incorporating the spirit of the directives, while ensuring that, when translated into specific regulations and policies, they are strictly formulated, supported by a clear legal basis, and guarantee practical applicability and effectiveness in state management.

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