Restructuring the cost of housing projects
According to Mr. Le Hoang Chau, Chairman of the Ho Chi Minh City Real Estate Association (HoREA), currently a mid-range apartment (2 rooms) costs about 2.5 billion VND (35 million VND/m2), about 20 times higher than the average income of households and individuals who can save about 100 million VND/year.
Affordable apartments priced at around VND2 billion or less (VND25-30 million/m2) and social housing apartments are in very limited supply, so they have been virtually absent from the Ho Chi Minh City market in the past two years.
It is necessary to restructure the cost and price calculation of commercial housing projects to meet the housing needs of the majority of low-income people.
The Chairman of HoREA emphasized how to reduce housing prices and have more and more affordable commercial housing projects, many low-cost commercial housing apartment projects and many social housing projects to meet the housing needs of the majority of middle-income people. At the same time, it is necessary to ensure long-term social security in housing while developing the real estate market in a transparent, healthy, stable and sustainable direction.
The solution proposed by HoREA is to restructure the cost and calculation of selling prices of commercial housing projects.
The main costs of commercial housing projects include land fund creation fees, construction costs, financial costs, and management costs.
Regarding the cost of creating land funds, according to HoREA, it is necessary to change the way land use fees are collected, converting them into a tax levied on "the act of changing land use purposes from agricultural land, non-agricultural land to residential land", with a transparent tax rate (which can be about 15-20% of the land price in the land price list).
This will eliminate the "ask-give" mechanism and harassment; and reduce the land use fee compared to the current method, which will contribute to reducing housing costs, thereby creating conditions to reduce housing prices.
There is also no need to worry too much if investors still sell houses at too high a price, because they will have to pay more corporate income tax and in principle, prices are determined by the market. If they sell houses at too high a price, they may be turned away and boycotted by home buyers.
In addition, the increase in housing prices also comes from the stagnant and prolonged projects, increasing construction costs. The cause stems from "legal institutional bottlenecks", leading to the consequence of not being able to build a standard and reasonable "administrative procedure", giving rise to negativity and harassment.
Regarding management costs and capacity of housing project investors. Projects are not only delayed due to problems with construction investment processes and long administrative procedures, but the delay can also be due to investors' poor management capacity, or lack of financial resources, which increases management costs, financial costs, sales costs, after-sales costs, costs and house prices, and can even affect the quality of project works.
Therefore, businesses need to focus on increasing financial resources, improving the quality of corporate governance, innovation, applying information technology, digitalization, artificial intelligence (AI), and project management according to scientific processes (BIM), to improve productivity, quality, efficiency and control risks, as Professor Dr. Paul Krugman (Nobel Prize in Economics 2008) noted: "Labor productivity is not everything. But in the long run, it is almost everything."
And there are also “unnamed” costs in the process of investment preparation and project implementation. According to HoREA, the “unnamed” costs, whether they are more or less, increase or decrease, depend on the results of “the State creating a business environment that is increasingly transparent, transparent and accountable”, in accordance with international standards.
Solutions to increase the supply of low-cost commercial housing
According to HoREA, another effective method is to increase the supply of social housing and low-cost commercial housing, on the basis of building and perfecting effective support policy mechanisms.
HoREA proposed that the Government soon pass a Resolution to encourage businesses to invest in commercial housing projects with apartment prices not exceeding VND20 million/m2 in the provinces and not exceeding VND22-25 million/m2 in class I and special urban areas.
HoREA also proposed that the Government and the Ministry of Construction consider perfecting the mechanism and policies for social housing development, especially social housing for rent and social housing for hire-purchase, attracting more businesses to participate and effectively using land funds planned for social housing development, to increase the supply of social housing to meet the huge demand of beneficiaries of social housing policies, contributing to reducing commercial housing prices.
In addition, HoREA proposed to arrange "recapitalization sources from the state budget" and "interest rate compensation" for the Vietnam Bank for Social Policies and 04 commercial banks (designated by the State Bank) to implement credit incentives for beneficiaries of social housing policies in the next 05 years.
Regarding increasing the supply of low-cost commercial housing, HoREA said that the Land Law stipulates no exemption or reduction of land use fees for all commercial housing projects, the Tax Law stipulates only a 50% reduction in value-added tax and corporate income tax rates for social housing projects, and the Housing Law also does not stipulate mechanisms and policies to support low-cost commercial housing projects.
In fact, commercial housing projects have many levels, such as high-end (luxury) housing projects, mid-high-end housing projects, mid-range housing projects, low-cost commercial housing projects. Even if the low-cost commercial housing project has a price equivalent to the social housing price, it will not enjoy preferential policies.
But the reality of the preferential credit package of 30,000 billion VND (2013-2016) shows that there is a type of commercial housing with a price equivalent to the price of social housing, not exceeding 1.05 billion VND/unit.
HoREA proposed that the Government soon pass a Resolution to implement the "Low-cost Commercial Housing Development Project" with preferential mechanisms and policies on land use fees, taxes, and credit to encourage businesses to invest in commercial housing projects with apartment prices not exceeding VND20 million/m2 in the provinces and not exceeding VND22-25 million/m2 in class I and special urban areas.
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