Proposal to establish an agency with comprehensive responsibility for social housing

Recently, the Government has had many strong solutions to increase the supply of social housing. For example, approving the project "Investing in the construction of at least 1 million social housing units in the period of 2021 - 2030", or launching a credit package of 120,000 billion VND to support interest rates for investors and buyers of social housing.

Dr. Doan Van Binh, Vice President of the Vietnam Real Estate Association (VNREA), said that to achieve the goal of having 1 million social housing units by 2030, Vietnam can refer to some successful models abroad.

Proposal to establish an agency with comprehensive responsibility for social housing image 1 — Experts propose considering the establishment of a specialized agency to manage social housing. Photo: DM

For example, in Singapore, the government has assigned the task to a single specialized unit, the Housing Development Board, under the Ministry of National Development. This is the organization that provides loans to people with preferential rates and limits of up to 85% of the total value of the apartment.

“If people buy an apartment worth 300,000 Singapore dollars, this organization can lend up to 255,000 Singapore dollars,” said Mr. Binh.

In addition, to help people buy social housing, the Government provides loans so that each month people only have to spend less than 20% of their income to pay for housing.

According to Mr. Binh, Singapore also applies a compulsory savings system called the "Central Provident Fund" to help social housing buyers avoid large debts by making regular payments at low financial costs.

The savings system's sources of funds come from mandatory contributions from employees, civil servants and employers, of which: employers pay 14%/month and low-income employees and civil servants must pay 20%/month.

“Under this system, a future home buyer must save a certain amount of money as stated in the loan contract before he or she is allowed to borrow money at an interest rate lower than the market rate,” said Mr. Binh.

Or in New Zealand, the Government has developed social housing in the form of rental housing for people who cannot rent private housing and the Government will support paying part of the rent.

The New Zealand Government has a housing subsidy system that ranges from Level 1 to Level 6. Level 1 is emergency housing and Level 2 is social housing. The lower the level, the more priority it has.

Or in Thailand, since 1973, the Government has established the National Housing Agency, in coordination with the Government Housing Bank, to implement a project of 1 million social housing units for the elderly, the sick, young couples and people with low to middle incomes.

The Government Housing Bank (GHB) has 50 billion baht in loans for social housing. Each social housing loan is not more than 1 million baht (about 700 million VND). People with an income of only 25,000 baht/month can own a house under the mortgage loan program and have to pay only 3,600 baht/month.

Those with incomes of more than 25,000 baht per month also benefit from the Scheme with a fixed interest rate of 3% for a loan of 1 million baht for the first 3 years.

Private social housing development enterprises receive corporate income tax incentives from the Government, and bank loan interest rates are 2-3% lower than commercial loan interest rates.

“Thus, along with the policy of encouraging the private sector to participate in creating and providing social housing, the Thai Government directly participates in creating and selling social housing to low-income people in Thai society,” said Mr. Binh.

In parallel with the Project to build 1 million social housing units, Thailand also focuses on developing affordable housing mainly through private enterprises but with the participation of the Government.

Faced with the urgent need for housing, Mr. Binh said that Vietnam can learn from experiences and select successful solutions abroad, such as having more support solutions and incentives for investors when building social housing, or considering establishing a specialized agency to manage social housing.

“Currently, in Vietnam, there is no specialized agency solely responsible for managing social housing, which is currently assigned to the Ministry of Construction. To further improve the effectiveness of management as well as effectively develop social housing development models, it is necessary to consider establishing a specialized agency responsible for managing social housing to comprehensively delegate authority and assign responsibilities commensurate with the task,” Mr. Binh emphasized.

According to Mr. Binh, Vietnam also needs to develop practical policies to attract private participation in building affordable housing through administrative procedures, incentives on capital, interest rates, etc.

“Social housing alone is unlikely to meet the housing needs of low- to middle-income people. Affordable housing needs to play a major role in our country’s housing market soon,” said Mr. Binh.

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