The draft amended Law on Asset Auction proposes raising the minimum advance deposit for residential land-use rights auctions from 10 percent to 20 percent of starting prices, while keeping the maximum threshold at 50 percent.

While agreeing with measures to prevent abnormally high bidding followed by deposit forfeiture, National Assembly delegate Phan Thi My Dung (Tay Ninh Province) warned that such deposit levels would pose significant financial barriers.

She cited the example of land projects worth hundreds of billions of dong, saying the higher deposit would force investors to mobilize a substantial amount of money upfront, before knowing whether they would win the auction. 

High deposits

Requiring such a large sum in advance could exclude investors with the capacity and viable project plans from the auction, she argued, while the ability to meet the deposit requirement does not necessarily reflect an investor's ability to implement a project.

The same concern applies to individuals. Dung said that for a plot of land with a starting price of VND6 billion, an individual would have to prepare VND3 billion upfront without knowing whether they would win the auction. This could immediately make potential bidders hesitant about taking part.

"Notably, the deposit requirement would double from the current level, while the draft law also expands the cases in which online auctions are mandatory. Combining these two requirements could increase participants' reluctance to take part in auctions," she said.

The larger the deposit, the greater the concern that even a minor mistake or an unforeseen incident could result in the entire amount being forfeited. As a result, many people with genuine demand and sufficient capacity might think twice or even withdraw from auctions, reducing the number of participants and limiting competition.

Dung said the proposed range of 20-50 percent was too broad. Without specific criteria, it could lead to inconsistent application. She suggested retaining the current deposit rate and allowing a higher rate only when justified by the nature and value of the asset and the risk of the winning bidder forfeiting the deposit.

National Assembly deputy Le Thanh Hoan, representing Thanh Hoa Province, commented that the draft law introduced various measures to prevent acts that distort prices of land and public assets. However, he argued that simply raising deposit rates and imposing bans on future participation in auctions would address only the symptoms of the problem.

"The root cause of the practice of making excessively high bids and then forfeiting deposits lies in the lack of clarity over when the contract for the sale of an auctioned asset is considered concluded. Many bidders still regard winning an auction merely as an initial step or an optional choice: they can buy if they want, or accept losing their deposit if they change their minds," Hoan said.

Solutions

Citing the experience of several countries, he said the auctioneer's final hammer strike immediately establishes the validity of the sale contract. If the winning bidder deliberately fails to make payment, they must not only forfeit the deposit but also compensate for any shortfall if the asset is resold at a lower price, as well as cover the costs of holding the new auction.

He proposed stipulating that winning bidders are considered to have executed sales contracts the moment auctioneers announce winners. From that point, the rights and obligations of the parties under the contract would take effect in accordance with civil law.

If winners fail to fulfill payment obligations on time, asset owners should hold rights to enforce obligations under the Civil Code or unilaterally terminate contracts to organize re-auctions and claim damages.

Minister of Justice Hoang Thanh Tung noted public outrage over individuals and organizations colluding, depressing prices, or inflating land and mineral rights before forfeiting deposits to create artificial price baselines for profit.

The draft, therefore, tightens participation conditions by barring immediate relatives (parents, spouses, children, siblings) from bidding on the same asset, while parent and subsidiary companies within one group cannot bid together. It adds bans of six months to five years for winning bidders violating payment obligations or sabotaging auctions.

Addressing whether the 20 to 50 percent land auction deposit requirement creates financial barriers for genuine buyers, the minister clarified that buyers with real housing needs prepare corresponding finances, while non-winning deposits are refunded rapidly within two business days.

The minister added that the 20 to 50 percent range grants flexible authority to asset owners based on local conditions, rather than enforcing the maximum 50 percent rate universally.

Tran Thuong - Pham Hai