With a tight budget, where will Ho Chi Minh City get capital to develop social housing?

Ho Chi Minh City can only allocate 10% of its budget to implement social housing programs, so it is necessary to unlock capital from society.

In the 2021-2025 period, the Government assigned Ho Chi Minh City to develop 26,200 social housing units. The city aims to build 35,000 units (including workers' accommodation) with 37 projects. This target is 69,700 units by 2030.

To complete these apartments, Deputy Director of the Ho Chi Minh City Department of Construction Huynh Thanh Khiet said at the National Assembly's supervision meeting on July 12 that from now until 2025, the city needs VND37,700 billion, but the budget can only allocate about VND3,770 billion. By 2030, the total investment capital will increase to VND86,400 billion, but the city budget can only allocate VND8,600 billion.

According to Mr. Khiet, the lack of investment capital from the state to build state-owned social housing programs is one of the reasons why the city has only achieved more than 2% of the set target so far.

“The city can only allocate 10% of its capital to implement social housing programs,” said Mr. Khiet. Therefore, to achieve the plan, it is necessary to mobilize capital from society, otherwise it will be difficult to achieve the set target.

Capital is one of the factors that makes the development of social housing in Ho Chi Minh City difficult. In the photo: Social housing project for workers to rent in Thu Duc City. Photo: Trong Tin

Vice Chairman of Ho Chi Minh City People's Committee Bui Xuan Cuong said that regarding social housing development,... In the period of 2015 - 2023, the City invested in the construction and completion of 24 social housing projects, with a scale of 18,708 apartments and a total floor area of 1.58 million m2.

Although the results are positive, they still do not fully meet the social housing needs of low-income people. In addition to problems with legal procedures or implementation, lack of capital is also a problem when just one period of congestion will cause the whole process to stagnate.

“The city has an area in District 12 that previously used budget money to clear the land and then handed it over to the City Housing Development Fund for investment. And calculated the land use fee and then recorded revenue and expenditure to increase the charter capital for the fund.

The process of implementation is possible, but currently there is no capital. Now the City wants to take it back for public investment to build thousands of social houses, but the Department of Finance has been researching for several months and still does not know how to record the revenue and expenditure reduction in the charter capital of this fund," Mr. Cuong gave an example.

Capital from the budget is limited, but mobilizing capital from society currently faces many barriers, and policies to attract investment in this segment do not make businesses interested.

Mr. Le Hoang Chau, Chairman of the Ho Chi Minh City Real Estate Association (HoREA), said that currently, investors building social housing cannot mortgage the project but must mortgage another project, so this is an inconvenience.

In addition, incentives for investors are not attractive enough. Currently, the profit margin for social housing projects is only 10% while there are many unnamed costs. Therefore, it is necessary to raise the profit margin to 15% to attract investors.

According to Mr. Chau, the housing law allows businesses that build 100% social housing for rent to have a 70% reduction in land use fees, but in reality the tax law does not allow it. Therefore, the tax reduction for these projects is only 50%.

Minister of Construction Nguyen Thanh Nghi commented that social housing development is a huge demand at present but there are still many obstacles. However, from August 1, when the Land Law, Housing Law and Real Estate Business Law come into effect, the Government will issue relevant decrees that will remove many bottlenecks for housing and social housing development. In addition, the Government is studying incentive policies for investors in the direction of increasing and expanding incentives to make implementation more feasible.

According to the assessment of Vice Chairman of the National Assembly Nguyen Duc Hai, capital is one of the factors that makes the development of social housing in Ho Chi Minh City difficult.

Mr. Hai noted that the City needs to study the experiences of countries around the world such as Singapore, establish a social housing development bank in Ho Chi Minh City as an investment fund with the support of credit institutions and economic organizations to be more sustainable so that people with income will have housing in the future.

"The issue of revenue and expenditure or turning that into business capital, recommending that the housing development fund become a financial institution as well as the City's investment fund become an institution so that we have more room to mobilize social resources and business participation", the Vice Chairman of the National Assembly said, if we only look at public investment, only look at the state budget or land resources, it will not be solved.

According to the report of the Ho Chi Minh City People's Committee, in the period of 2016 - 2020, social housing in the City developed strongly, with 19 projects completed and put into use, supplying the market with more than 14,900 units.

However, in the period 2021 - 2023, the number of completed social housing projects decreased sharply. While the total floor area of the city increased by 19.74 million m2, social housing increased by only 0.062 million m2, accounting for 0.31%. In 2023, no projects were completed.

Regarding selling prices, in the period 2015 - 2023, the city has appraised the prices of 11 rental and hire-purchase projects. Accordingly, each square meter (excluding VAT) of apartment floor has the highest price of 17.2 million VND and the lowest price of 12 million VND.

Source: https://baodautu.vn/batdongsan/ngan-sach-eo-hep-tphcm-lay-von-dau-de-phat-trien-nha-o-xa-hoi-d219900.html