Red book of social housing project worth 0 VND
Sharing at the market report announcement ceremony organized by the Vietnam Association of Real Estate Brokers (VARS) recently, Mr. Nguyen Hoang Nam - Member of the VARS Real Estate Market Research Working Group - General Director of G-Home Joint Stock Company - acknowledged that the demand for social housing is very large, while this segment also receives much attention and investment from the Government and management agencies, but the development momentum has not yet met the urgent need for supply in the housing market.
Explaining this situation, the general director of this enterprise specializing in developing social housing pointed out many of the biggest reasons why the social housing segment is still slow to develop.
For example, according to Mr. Nam, in the process of developing a social housing project, the legal mechanisms of the management agencies are still complicated. Although the project is exempted from land use fees by the State, it still has to be appraised before it can be exempted. The investor must pay in advance for site clearance compensation, and moreover, it is paid in a "suspended" state (it can only be deducted when the project is completed, or some amounts will be offset against the land price later).
It takes more time to develop a social housing project than a commercial housing project. According to the process, to develop a social housing project, just the investment preparation stage to obtain a construction permit takes at least 2 years. When selling the last apartment, 20% of the total area of the project must be reserved for rent, and audited within 5 years.
"The whole process is so long but the investor is only allowed to enjoy a 10% profit. Without needing to calculate carefully, we can see that the risk of loss is very high," Mr. Nam expressed.
Social housing on Tam Trinh Street (Hoang Mai, Hanoi) has been in use for more than 5 years (Photo: Ha Phong).
According to Mr. Nam, building social housing also has difficulties in accessing capital from investors when building social housing.
"For commercial housing projects with land use rights, banks can hold the project's red book as collateral. As for social housing, when we bring the project's red book to the bank, it is not considered collateral because it has a value of 0 VND," Mr. Nam shared.
For a general project, the capital structure will include about 20% equity, 30% capital mobilized from future real estate and 50% loan capital. Therefore, if the investor cannot borrow from the bank, it is considered that the investor cannot manage 50% of the project capital.
Many investors are "crying out" that it is very difficult to access the 120,000 billion VND credit package, they cannot have collateral to borrow capital to develop the project," Mr. Nam stated the general situation.
Social housing is not for sale to the rich
According to Mr. Nam, in the past 10 years, regarding the regulation of reserving 20% of land in urban areas for social housing development, if statistics are counted, many investors only focus on "skimming" the commercial housing part to "pocket" and neglect the social housing part because it is not profitable. But now, they themselves are demanding to amend the law.
"In my opinion, there should be coercive measures to force these investors to build social housing as previously agreed, otherwise they cannot implement other projects. This situation contributes to slowing down the development of social housing," Mr. Nam suggested.
In addition, according to Mr. Nam, the groups of people who are allowed to buy social housing are still heavily dependent on the mechanism of asking and giving. According to international practice, in countries with social housing, I do not see the phrase "low-income people" appearing like in our country. Of course, social housing is not sold to the rich, however, is it appropriate to tighten it to the point that people who do not have to pay personal income tax like us?
If they do not have to pay personal income tax, meaning their income is less than 11 million/month, workers may not be able to support themselves and their families and most likely do not have savings. Meanwhile, to buy a house, buyers must have accumulated assets.
"I think it would be more correct to define social housing as being for people who have savings but do not have access to commercial housing. The price of commercial housing has also been pushed too high," said Mr. Nam.
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