People who want to buy social housing are having difficulty accessing low-interest loans.

Need to remove loan obstacles for home buyers

Accordingly, every year the Prime Minister issues a decision on preferential loan interest rates of 4.8%/year for purchasing or leasing social housing at the Vietnam Bank for Social Policies. The Governor of the State Bank has also issued a decision on preferential loan interest rates of 4.8 - 5%/year for purchasing or leasing social housing at commercial banks designated by the State Bank.

However, many people believe that in the past, most social housing buyers could not borrow preferential credit, but had to borrow commercial credit with an interest rate of about 9%/year. The reason is that the 2014 Housing Law does not allow credit institutions designated by the State to lend preferential loans to households and individuals to buy or rent-purchase social housing.

In addition, the National Assembly Standing Committee has not yet allocated state budget expenditures to refinance and subsidize interest rates for the Social Policy Bank and four commercial banks designated by the State Bank. For that reason, home buyers find it difficult to borrow preferential credit, and must borrow commercial credit with an interest rate of about 9%/year.

People who want to buy social housing are having difficulty accessing capital and have low interest rates. — Preferential loans are an important factor promoting social housing development.

In addition, only cases with outstanding preferential loans for purchasing social housing and commercial housing with prices below VND 1.05 billion under the preferential credit package of VND 30,000 billion according to Resolution 02/NQ-CP dated January 7, 2013 of the Government will continue to apply preferential loan interest rates. In reality, many social housing projects have selling prices quite high compared to the above level, even some projects in good locations have selling prices that are only slightly lower than commercial housing projects.

Faced with these issues, the Ho Chi Minh City Real Estate Association has recently submitted a document to the Government and the National Assembly Standing Committee to consider submitting to the National Assembly to supplement Resolution No. 29/2021/QH15 of the National Assembly dated July 28, 2021 on the medium-term public investment plan for the period 2021-2025 to allocate refinancing expenditures for the Social Policy Bank, subsidize interest rates for commercial banks designated by the State Bank to implement preferential loans for social housing from now until 2025 and to achieve the goal of developing 1 million social housing units in the period 2021-2020.

In addition to interest rates for home buyers, the Project to develop 1 million social housing units still has some arising problems, specifically, out of 100 social housing and worker housing projects licensed for construction, only 24 projects are eligible for loans with a total capital demand of nearly 12,500 billion VND.

Although many localities have considered investing in developing social housing for low-income workers as an investment item in medium and long-term capital sources. However, there are many new problems arising when implementing projects. Among them, the issue of land fund for project implementation, finding investors and site clearance are quite difficult problems.

Find more solutions

In order to gradually remove obstacles in promoting the development of social housing, in recent times, relevant agencies have actively recorded and accepted to adjust and amend legal issues to suit the practical situation. For example, regarding the support policy for low-income people, according to the Ministry of Construction, there are currently two credit programs to support buyers and renters of social housing.

The first program is a preferential loan package according to Resolution No. 11/2022 of the Government and Resolution No. 43/2022/QH15 of the National Assembly through the Social Policy Bank for individuals and households to buy, rent-purchase social housing, housing for workers; build new or renovate, repair houses according to the social housing policy. The total maximum loan capital of this program is 15,000 billion VND.

According to the report of the Social Policy Bank, counting the capital source of 15,000 billion VND for social housing loans according to Decree 100/2015 stipulated in the Recovery Program, by August 16, 2023, the outstanding debt of the Social Policy Bank had reached 7,351 billion VND with nearly 19,900 customers.

The second program is according to Resolution No. 33/2023 of the Government. This Resolution has provided a solution for a credit package of 120,000 billion VND with the goal of supporting capital to implement the Project of building 1 million social housing apartments.

This credit package will be disbursed in the period of 2023-2030 for investors (to boost supply), individual customers borrowing to buy or lease social housing (to support demand) with interest rates during the preferential period 1.5-2% lower than the average interest rates of commercial banks.

The Ministry of Construction also said that it is currently working closely with the State Bank of Vietnam, the Vietnam Bank for Social Policies, ministries, branches and localities to urge and guide the implementation of the above credit packages.

In particular, regarding the issue of reducing social housing prices, the Ministry of Construction said that the Government is currently receiving and revising the draft Law on Housing (amended).

Accordingly, Article 84 of the draft stipulates the determination of rental, hire-purchase and sale prices of social housing as follows: The selling price is determined based on calculating all costs to recover investment capital for housing construction, including compensation, support, resettlement costs, and investment costs for construction of technical infrastructure systems (if any) within the scope of the project...

The standard profit is 10% for the area of social housing construction, excluding incentives from the State and maintenance fees that the buyer must pay according to regulations. The lease purchase price is determined as the selling price and does not include the housing maintenance fees paid by the lessee according to the provisions of the Housing Law. The rental price is agreed upon by the investor and the lessee.

Article 82 of the Draft Law also stipulates incentives for investors in social housing construction investment projects, specifically: exemption from land use fees, land rent, tax incentives according to tax laws, incentives for land area or commercial floor area and not having to account for social housing prices...

Once the above regulations are passed, it will encourage investors to participate in the social housing development market, thereby ensuring that the price of this type of housing will be more suitable. So that low-income people have the conditions to choose.

According to the Ministry of Construction, to date, localities across the country have completed the construction of 181 social housing projects, with a construction scale of about 94,390 apartments, with a total housing floor area of 4.8 million m2. Localities are continuing to implement 291 social housing projects, with a construction scale of about 271,500 apartments, with a total floor area of about 14,520,000 m2.
In addition, 11 localities have announced a list of 24 projects eligible for a preferential credit package of VND120,000 billion, with a loan demand of about VND12,400 billion.

Source