From June 2023, social housing projects are not allowed to reserve 20% of their floor area or residential land for commercial purposes. This regulation means that incentives for social housing project investors are reduced, discouraging them from participating in this market.
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| Inside the workers' housing area in Trang Bom District. Photo: H.Loc |
Regarding the above content, the Provincial People's Committee has sent a written request to the Ministry of Construction.
* No more commercial housing in social housing
Previously, investors of social housing projects (including independent social housing projects and social housing construction investment projects from the 20% land fund of commercial housing projects) were allowed to reserve 20% of the total residential land area or floor area for the construction of commercial housing. This regulation was intended to offset investment costs, contribute to reducing selling prices, rental prices, and hire-purchase prices of social housing, and reduce costs for social housing management and operation services after investment. However, this regulation is no longer in effect.
Specifically, Decree No. 35/2023/ND-CP amending and supplementing a number of articles of decrees under the state management of the Ministry of Construction (Decree No. 35) issued by the Government in June 2023 and the official dispatch correcting this decree issued in July 2023 both removed the content of reserving 20% of residential land area for commercial business in social housing projects.
According to the explanation of the Ministry of Construction, this regulation aims to increase the housing fund for low-income people, which is currently lacking, and to concretize the Government's project to build at least 1 million social housing apartments in the 2021-2030 period. However, from a local perspective, removing this incentive will reduce the attractiveness and discourage investors from participating in the construction of social housing, especially social housing for rent.
Mr. Ho Van Ha, Director of the Department of Construction, said that removing the incentive of reserving 20% of residential land area for commercial business in social housing projects will directly affect investment attraction in this field, affecting the implementation of the goal of developing housing for low-income people. In addition, the regulation that independent social housing projects must have a number of service works and public utilities to serve residents also reduces the attractiveness to investors.
Sharing about this issue, Mr. Nguyen Huu Nguyen, Director of the Department of Planning and Investment, said that in the past, although social housing projects enjoyed land incentives, investors were not interested due to many reasons including complicated procedures, interest rate restrictions of 10%, and lack of capital for investors...
In fact, the regulation to remove the 20% preferential floor area of residential housing for commercial business has been stated in Decree 49/2021/ND-CP amending Decree 100/2015/ND-CP on the development and management of social housing issued by the Government in 2021. However, in 2021 and 2022, the Covid-19 pandemic did not have many new projects implemented, so when Decree 35 reiterated this content, many localities and investors had opinions.
* Dong Nai proposes to amend regulations
Currently, both investors and localities believe that, under the condition that the project's interest rate is controlled, the reduction of incentives will make social housing, which is already difficult, even more difficult.
| According to Director of the Department of Planning and Investment NGUYEN HUU NGUYEN, applying the additional regulation of removing 20% of the floor area for commercial business will reduce investors' benefits, they will not continue to do it or even turn their backs on social housing. Localities will have great difficulty in attracting investment in social housing. |
Director of the Department of Construction Ho Van Ha said that regarding this issue, the Provincial People's Committee has sent a document to the Ministry of Construction requesting the Ministry to advise on supplementing preferential policies for commercial floor area in social housing projects; including the content of this preferential policy in the draft Law on Housing (amended) and allowing it to be applied immediately when this law is passed at the end of 2023. At the same time, there is a transitional provision allowing the application of these preferential policies to projects that have been decided on investment policies before the Law on Housing (amended) takes effect.
Regarding the bidding procedures for social housing projects, the province has issued a shortened process for social housing projects, however, the bidding procedures for selecting investors still take a long time. Therefore, the province recommends that the Ministry of Construction issue under its authority or report to the Government to issue separate regulations on bidding for selecting investors for social housing projects in the direction of appointing investors in some cases or shortening the time for organizing bidding for selecting investors to facilitate the acceleration of the implementation of social housing and worker housing projects.
Ms. Dang Thi Kim Oanh, Chairwoman of the Board of Directors and General Director of Kim Oanh Real Estate Group Joint Stock Company (HCMC) said that removing the 20% floor price incentive for commercial business will certainly affect investment attraction and the progress of social housing projects. The Group will propose to the Ministry of Construction to amend the regulations by continuing to enjoy incentives; at the same time, propose to amend the regulations on subjects and conditions for purchasing social housing.
Currently, real estate investors tend to switch to social housing because commercial housing is facing difficulties in policies, capital sources and low demand. If social housing is truly open in terms of procedures and attractive incentives, the balance of supply and demand for social housing will gradually be balanced and the goal of the whole country building at least 1 million social housing units in the period up to 2023 will soon become a reality.
Hoang Loc
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