Do low-income people need housing or home ownership?

Sharing at the conference on solving difficulties in social housing, Dr. Hoang Van Cuong, Vice Principal of the National Economics University, said that this is a very ripe time to promote the development of social housing, however, the implementation results are still limited.

Người thu nhập thấp cần chỗ ở hay cần sở hữu nhà?- Ảnh 1. — Dr. Hoang Van Cuong, Vice Principal of National Economics University

"I suggest we define more accurately the goal of developing social housing. Are we solving the housing needs of low-income people or are we solving the need for home ownership of low-income people?", Dr. Cuong raised the issue.

He said that recently, the social housing development program has focused more on solving the need for low-income housing than supporting the need for home ownership for low-income people.

For low-income people, it is difficult to make ends meet, so how can they save money to pay interest and loan principal?

"I heard a representative of a social housing investment and development company say that after a period of checking, 80% of the buyers no longer lived there and were reselling," Mr. Cuong said.

Therefore, according to him, more attention should be paid to the social housing development program for rent with preferential conditions different from current programs.

Currently, the location of social housing development is quite far from the center of the province or city. There is no means of transportation, it takes time to travel so people do not want to go far.

"The social housing program only reserves 2% for rent, but it is far away so people will not rent. People are willing to rent houses at higher prices, more cramped but close to work, close to where their children study and other outstanding services in the center," Mr. Cuong said.

Therefore, according to this expert, it is necessary to plan locations near the center but with low commercial advantages to build a rental housing fund. Only rent, not sell, so we can meet the housing needs of low-income people.

This form of rental housing should use very preferential loans. For example, loans from the Social Policy Bank are long-term loans with low interest rates. The reason is that if businesses invest capital to rent, the rent is not enough to cover operating costs, let alone recover the investment capital. "This program should be 50% for rent and 50% for purchase," Mr. Cuong said.

In addition, regarding capital support for social housing development, it is necessary to simplify lending conditions for groups of investors as much as possible. Supporting interest rates lower than 1.5 - 2% does not mean much, but it is necessary to commit to a specific interest rate, for example, committing to a lending interest rate of 7 - 8% so that businesses can be proactive.

This expert also believes that the 40,000 billion VND interest rate support package under Resolution 43 has been almost impossible to disburse. The 40,000 billion VND package should be transferred to the low-income housing support program - with the right project, the right target, and no fear of lending incorrectly.

In addition, it is necessary to increase the loan term for this project, ensuring at least one full cycle for businesses to invest and recover capital.

Priority given to inner-city land for housing rental to the poor

Dr. Le Xuan Nghia, member of the National Monetary and Financial Policy Advisory Council, acknowledged that many unsuccessful policies were due to forcing banks to lend at low interest rates and bear all policy risks.

"Banks and businesses are different entities. According to the market economy, they should not be allowed to suffer losses and must follow the market mechanism. The same goes for social housing development policies," Mr. Nghia said.

Người thu nhập thấp cần chỗ ở hay cần sở hữu nhà?- Ảnh 2. — Dr. Le Xuan Nghia, Member of the National Monetary and Financial Policy Advisory Council

Agreeing with the plan to build houses for rent, according to Dr. Le Xuan Nghia, the Government should prioritize inner-city land for housing for the poor because the poor have no means of transportation other than public transport. Large cities in the world plan housing in a way that puts the poor near public transport systems and hospitals.

The second type is a housing development model like Singapore, whoever buys a house must pay an interest rate of 2.5% for a bank loan with a term of up to 30 years and the remaining difference compared to the market interest rate is compensated by the Government . Thus, the bank is not affected because the Government has supported it.

The minimum home purchase term in the US and Singapore is 30 years, and even in the German part of Switzerland, the term is 88 years.

Another problem is administrative procedures associated with petty corruption. "We surveyed a number of provinces, the procedures are extremely complicated, each year some provinces only clear a few dozen or five dozen hectares of land for compensation and clearance. Meanwhile, some provinces innovate their methods, and can increase the area of land clearance compensation from 110 hectares to 1,000 hectares, which no one believes but in the end they can do it. Procedures are one of the biggest problems that need to be reformed," Mr. Nghia said.

Citing many businesses specializing in social housing, for example, Korea, Singapore, and the Netherlands applying to build social housing in Hanoi, but encountering difficulties in approving planning at scales from 1/2000 to 1/500, he said the approval process must be flexible.

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