Under current regulations, when auctioning land-use rights for allocation or lease to implement investment projects, the required deposit ranges from a minimum of 10 percent to a maximum of 20 percent of the starting price.

In the draft government resolution on addressing problems in land-use rights auctions under the Land Law, the Ministry of Justice has proposed raising the maximum deposit from 20 percent to 50 percent of the starting price.

According to the drafting agency, there has been a recent trend where bidders exploit the low deposit requirement to bid high and then withdraw the bidding, accepting to forfeit the deposit either for profit or personal motives. 

Local newspapers in late March 2025 reported that 22 out of 27 land lots won at an auction on October 19, 2024 had yet to be paid for by the winning bidders. This meant that 80 percent of the lots were abandoned after the auction.

Each lot ranges from 49 to 72 sqm, with winning bid prices from VND133 million to VND262 million per sqm, or 5-8 times higher than the starting price.

According to many local residents, the actual market price of land in the surrounding area was only around VND120-130 million per sqm. Winning bids as high as VND166 million or even VND262 million per sqm were viewed as one of the main reasons behind the mass withdrawal. 

Many participants only joined the auction with the intent to profit from price differences. But when the winning prices far exceeded market value and there were no buyers afterward, they chose to abandon their deposits.

This negatively affects the real estate market and reduces the effectiveness of land resource utilization for socio-economic development. Therefore, raising the deposit is considered necessary to promptly deter such actions.

Regarding penalties, the draft resolution stipulates that individuals who win land-use rights at auction but fail to fulfill their payment obligations, thus leading to annulment of auction results, will be banned from participating in auctions for a period of 6 months to 5 years. Additionally, they must fully cover the organizing costs, service fees, and other related expenses as required by authorities.

Lawyer Tran Tuan Anh, Director of Minh Bach Law Firm, said that to limit speculative bidding and payment defaults in land auctions, a comprehensive solution is needed, involving auction organizers, legal regulations, bidders, and a more transparent market.

According to Anh, increasing the deposit requirement is an effective measure. He explained that only investors with genuine intentions will be willing to place a 50 percent deposit. The 50 percent is calculated based on the starting price set by the auction organizer, typically much lower than the winning bid. So it will not burden individuals or businesses with real demand.

“Raising the maximum deposit to 50 percent is a way to verify the actual financial capability of real estate bidders,” Tuan Anh said.

Regarding the proposal to ban violators from auctions for 6 months to 5 years and require them to pay related costs, Anh expressed his support. He noted that bidders must be fully aware of their rights and obligations when participating in auctions, including the consequences of withdrawal.

“This solution will reduce cases where people win auctions and then give up auctions, accepting to forfeit deposits, making the auction process more substantive and transparent,” Tuan Anh said.

The optimal solution?

Although Pham Duc Toan, CEO of EZ Property, agreed that increasing the required land auction deposit to a maximum of 50 percent may help prevent speculative price inflation and withdrawal, he expressed concern that such a high deposit requirement might reduce the number of participants. This could increase the risk of collusion and under-the-table agreements, potentially making the proposal less than optimal.

Toan explained that for small individual land lots, a deposit may not be significant. But for large projects worth hundreds or even trillions of dong, requiring a 50 percent upfront deposit would pose serious difficulties, making it hard for businesses to arrange funds. Previously, with a 20 percent deposit cap, companies could balance their finances and rely on bank loans for the remaining 80 percent after winning the auction.

"The minimum deposit should remain at 10 percent, while the maximum should not be rigidly fixed, for example, capped at 30 percent. Depending on the project, the auction organizer should have flexibility to decide," Toan said.

"The minimum deposit should remain at 10 percent, while the maximum should not be rigidly fixed, for example, capped at 30 percent. Depending on the project, the auction organizer should have flexibility to decide," Toan suggested.

Nguyen Le