Vietnam proposes higher deposits to prevent land auction manipulation

The Vietnamese government has submitted a draft amendment to the Law on Asset Auction to the National Assembly, introducing stricter measures to combat land price manipulation. A key proposal involves increasing the minimum deposit for land use rights auctions for residential land to between 20% and 50% of the starting price, effectively doubling the current minimum of 10%.

To deter participants from artificially inflating prices and subsequently failing to fulfill financial obligations, the draft includes severe penalties. Individuals who win an auction but fail to pay the deposit will be banned from participating in nationwide land auctions for a period ranging from six months to five years. Additionally, winners whose violations lead to the cancellation of auction results will forfeit their deposits to cover potential damages.

These measures aim to ensure that participants possess genuine financial capacity and to protect the real estate market from speculative bubbles. The proposal follows incidents in areas like Hanoi, where high bids were placed only for participants to abandon the purchase, leaving market prices disconnected from actual transaction values.