Back
STRICT HANDING MARKET MANIPULATION IN AUCTIONS OF LAND USE RIGHTS
STRICT HANDING MARKET MANIPULATION IN AUCTIONS OF LAND USE RIGHTS
On August 21, 2024, Prime Minister Pham Minh Chinh signed and issued Directive No. 82/CD-TTg, directing relevant agencies to promptly rectify the process of land use rights auctions. The directive was sent to the Ministers of the following ministries: Natural Resources and Environment, Construction, Finance, Justice, Public Security; and to the Chairpersons of the People’s Committees of provinces and cities under central authority.
Accordingly, given the situation where some auction-winning prices are many times higher than the starting prices, drawing significant public attention and potentially affecting socio-economic development, the investment environment, business operations, and the housing and real estate market, the Prime Minister has instructed:
The Chairpersons of the People’s Committees of provinces and centrally governed cities to:
Direct relevant agencies and units to review the organization of the auction of land use rights in their areas to ensure legality, transparency, and openness; promptly identify and strictly handle any violations of laws in auctioning land use rights, and prevent exploitation of land use rights auctions for profiteering which disrupt the market.
Accordingly, given the situation where some auction-winning prices are many times higher than the starting prices, drawing significant public attention and potentially affecting socio-economic development, the investment environment, business operations, and the housing and real estate market, the Prime Minister has instructed:
The Chairpersons of the People’s Committees of provinces and centrally governed cities to:
Direct relevant agencies and units to review the organization of the auction of land use rights in their areas to ensure legality, transparency, and openness; promptly identify and strictly handle any violations of laws in auctioning land use rights, and prevent exploitation of land use rights auctions for profiteering which disrupt the market.
The Minister of Natural Resources and Environment shall lead, and cooperate with the Ministers of Justice, Finance, Construction, and the Chairpersons of the People’s Committees of provinces and centrally governed cities to:
Urgently review and inspect the organization of the auction of land use rights for any abnormal signs, addressing according to their authority any violations of laws on auctioning land use rights.
Promptly identifying legal inadequacies to advise and propose competent authorities to amend, adjust, and supplement regulations to prevent profiteering; concurrently, propose strict handling measures for manipulative activities in auctions causing market disturbances, reporting to the Prime Minister of the Government of Vietnam before August 30, 2024.
The Minister of Construction shall lead, and cooperate with the Ministry of Natural Resources and Environment and the People’s Committees of provinces and centrally governed cities to:
Study and evaluate the specific impacts of recent auction results of land use rights, especially those cases with unusually high winning bids many times over starting prices on the land and housing price levels, the housing market (supply and demand), actively regulate and resolve within their authority, and propose effective measures to mitigate any negative impacts (if any), reporting to the Prime Minister of the Government of Vietnam.
Relevant agencies shall direct their units and localities to strengthen on-the-ground situation awareness, promptly detecting, preventing, and strictly handling any legal violations in the auctioning of land use rights, particularly activities of market manipulation and price inflation creating an unhealthy and unrealistic market for profiteering.
Prime Minister Pham Minh Chinh also require the Ministers of Natural Resources and Environment, Construction, and Finance to urgently guide and train local authorities on new policies under the Land Law, Housing Law, Real Estate Business Law, and the tasks specified in Official Directive No. 79/CD-TTg issued on August 13, 2024.
Currently, in some areas, the process of land auctions has seen cases where exceptionally high bids were made for certain plots, only for the bidders to forfeit their deposits, creating artificial price levels to manipulate the market. Additionally, the buying and selling of auctioned land for illicit profit has become quite common and even organized. For instance, in August 2024, the auction of golden land in Thu Thiem recorded winning bids far exceeding the real value of the land, causing significant upheaval in the real estate market. The subsequent withdrawal of the deposit by companies resulted in the loss of tens of trillions of VND from Ho Chi Minh City's budget, affecting urban infrastructure and social investment funding, as well as the reimbursement of compensation, land clearance, and resettlement costs that the city had undertaken in the context of tight budgets.
The repercussions of this issue include inflated land prices far above the current market value, negatively affecting the stability and sustainability of the real estate market and causing difficulties for developers who have not yet fully paid or only made partial payments for land use fees, particularly those who had signed contracts to raise capital from customers in advance.
Strictly handling market manipulation and price inflation in land use rights auctions will lay the foundation for a stable and transparent real estate market, protect the interests of investors and buyers, and limit speculation and price manipulation. This will not only help prevent a real estate bubble but also bolster public trust in the investment and business environment. Through this, the effectiveness of state management will be enhanced, promoting sustainable and healthy economic development.
Urgently review and inspect the organization of the auction of land use rights for any abnormal signs, addressing according to their authority any violations of laws on auctioning land use rights.
Promptly identifying legal inadequacies to advise and propose competent authorities to amend, adjust, and supplement regulations to prevent profiteering; concurrently, propose strict handling measures for manipulative activities in auctions causing market disturbances, reporting to the Prime Minister of the Government of Vietnam before August 30, 2024.
The Minister of Construction shall lead, and cooperate with the Ministry of Natural Resources and Environment and the People’s Committees of provinces and centrally governed cities to:
Study and evaluate the specific impacts of recent auction results of land use rights, especially those cases with unusually high winning bids many times over starting prices on the land and housing price levels, the housing market (supply and demand), actively regulate and resolve within their authority, and propose effective measures to mitigate any negative impacts (if any), reporting to the Prime Minister of the Government of Vietnam.
Relevant agencies shall direct their units and localities to strengthen on-the-ground situation awareness, promptly detecting, preventing, and strictly handling any legal violations in the auctioning of land use rights, particularly activities of market manipulation and price inflation creating an unhealthy and unrealistic market for profiteering.
Prime Minister Pham Minh Chinh also require the Ministers of Natural Resources and Environment, Construction, and Finance to urgently guide and train local authorities on new policies under the Land Law, Housing Law, Real Estate Business Law, and the tasks specified in Official Directive No. 79/CD-TTg issued on August 13, 2024.
Currently, in some areas, the process of land auctions has seen cases where exceptionally high bids were made for certain plots, only for the bidders to forfeit their deposits, creating artificial price levels to manipulate the market. Additionally, the buying and selling of auctioned land for illicit profit has become quite common and even organized. For instance, in August 2024, the auction of golden land in Thu Thiem recorded winning bids far exceeding the real value of the land, causing significant upheaval in the real estate market. The subsequent withdrawal of the deposit by companies resulted in the loss of tens of trillions of VND from Ho Chi Minh City's budget, affecting urban infrastructure and social investment funding, as well as the reimbursement of compensation, land clearance, and resettlement costs that the city had undertaken in the context of tight budgets.
The repercussions of this issue include inflated land prices far above the current market value, negatively affecting the stability and sustainability of the real estate market and causing difficulties for developers who have not yet fully paid or only made partial payments for land use fees, particularly those who had signed contracts to raise capital from customers in advance.
Strictly handling market manipulation and price inflation in land use rights auctions will lay the foundation for a stable and transparent real estate market, protect the interests of investors and buyers, and limit speculation and price manipulation. This will not only help prevent a real estate bubble but also bolster public trust in the investment and business environment. Through this, the effectiveness of state management will be enhanced, promoting sustainable and healthy economic development.
Email
Facebook