In short: A land use rights auction is how the State allocates or leases land through open bidding. Participating organizations must meet Article 55 of Decree 102/2024/ND-CP — including a 20% deposit of the starting price; individuals must be eligible for land allocation or lease. Land put up for auction must have completed compensation and site clearance, with an approved auction plan.
1. When does the State allocate or lease land via auction?
Under the Land Law 31/2024/QH15 (effective 1 August 2024), land use rights auction is one of the forms of land allocation and land lease (Article 124), used for commercial, service and housing projects and other cases where the law requires auction.
Conditions for holding an auction (Article 125(2) of the Land Law):
- The land has been recovered with compensation, support and resettlement completed (or not required); the project area has connected transport infrastructure;
- The land is included in the approved annual district-level land use plan;
- A detailed 1/500 construction plan is approved (for housing investment projects);
- An auction plan is approved by the competent authority.
2. Eligibility for participating organizations
Under Article 55(1) of Decree 102/2024/ND-CP, a participating organization must:
- Be eligible for State land allocation or lease (Land Law Articles 119–120); satisfy Article 122 conditions for land allocation/lease for investment projects; and have capacity and experience in project development;
- Where an economic group or parent–subsidiary group joins the auction for the same parcel or project: agree to nominate one company to participate;
- Pay a deposit of 20% of the parcel’s total value at the starting price;
- Not be prohibited from auction participation by law;
- Meet housing and real-estate business law conditions — for auctions to implement housing or real estate projects.
3. Eligibility for participating individuals
Under Article 55(2) of Decree 102/2024/ND-CP:
- Individuals must be eligible for State land allocation or lease (Land Law Articles 119–120) and meet the asset auction law’s conditions;
- An individual auctioning to implement an investment project must commit to establishing an economic organization meeting the same conditions as organizations (Article 55(1)). Establishment follows investment, enterprise and related laws.
4. Auction procedures
The main steps of a land use rights auction:
- Approve the auction plan: the competent authority approves the plan, setting the starting price, bid increments and deposit;
- Engage an auctioneer: sign an auction service contract with an asset auction organization;
- Public announcement: publish parcel details, starting price, time and venue under the Law on Asset Auction;
- Hold the auction: participants submit dossiers and deposits and bid under the auction rules;
- Sign the asset sale contract with the winning bidder;
- Pay land use fees / land rents per the auction result;
- Issuance of the certificate of land use rights to the winner.
5. Advantages for the winning bidder
The winner is allocated or leased land and granted a certificate per the auction result. Notably, under Article 30(1)(a) of the Law on Investment 143/2025, an investor winning a land use rights auction is exempt from the project security deposit — a significant cash-flow advantage over ordinary land allocation.
6. Risks and notes
- The 20% deposit: a winner refusing to sign the asset sale contract risks forfeiture under the auction rules and asset auction law.
- Parcel due diligence: even with cleared land, investors should verify detailed planning, construction norms and attached financial obligations.
- Financial capacity: winning bids can far exceed starting prices; total investment including payable land use fees needs careful calculation.
FAQ
Q: Can an individual join a land auction to develop a project?
A: Yes, but the individual must commit to establishing an economic organization meeting the organizational eligibility conditions, per Article 55(2) of Decree 102/2024/ND-CP.
Q: Is the 20% deposit credited toward land use fees?
A: The deposit is handled under the auction rules and the asset sale contract — normally credited toward the winner’s payment obligations.
Q: Must auction winners make a project security deposit?
A: No. Winning a land use rights auction exempts the investor from the project security deposit under the Law on Investment 143/2025.
Sources
- Land Law 31/2024/QH15 (Articles 119–120, 122, 124–125; effective 1 August 2024)
- Decree 102/2024/ND-CP guiding the Land Law (Article 55; effective 1 August 2024)
- Law on Asset Auction 01/2016/QH13 (auction procedure framework)
This article is for general information only and does not constitute legal advice for any specific case. Content is pending review by the QA Council (FLAW AI Legal Council).