Social housing apartment program has hiccup along way

According to the Ministry of Construction, despite enormous demand of social housing, the number of housing projects just meets 30 percent of demand in localities.

Social housing apartment program has hiccup along way

The Ministry said for the period 2011-2020, the country is in dire demand of 440,000 apartments including 134,000 ones in Ho Chi Minh City and 110,000 ones in Hanoi.

In Vietnam, social housing is a type of accommodation constructed by the government, organizations or individuals, intended for purchase or rent by residents, especially for low-income ones.
As per the HCMC Institute for Development Studies (HIDS)’s studies, around 81,000 families and individual are in dire demand of social housing. The municipal People’s Committee and related agencies have “open” policies to encourage housing developers to build social accommodations for low-income people.
Despite their efforts for five years, the number of social houses can meet 40 percent of demand.
A representative from the Department of Construction in HCMC said that social housing development have hiccups along the way; land and capital funds are the two biggest difficulties.
According to housing law 2014 and the government resolution No. 100/2015 about development and management of such house, commercial housing projects in urban must reserve 20 percent of land fund for social housing.
Nevertheless, investors prefer pays for land or housing fund transferring rather than building social houses in 20 percent land. It is short of not only land capitalization but also preferential fund for investors and buyers.
Many investors said that the government’s policies and mechanism have been implemented but it is hard to put into practice; as a result, the program can’t attract investors.
Specifically, land law stipulates that investors of social housing projects are exempted from land payment yet they are not allowed to mortgage the project for bank loans. Whereas the city has not had enough capital for developing social housing apartments; moreover, it has not taken 30 percent – 50 percent of state budget collected from commercial housing projects for social housing projects.
From 2013 to 2016, the government approved social housing program by launching a home credit package worth VND30 trillion (US$1.3 billion) yet there have been no program to provide capital for investors and buyers since the termination of the VND30-trillion housing stimulus package program in late 2016.
In its latest report on housing projects to the government, the Ministry of Construction said that because of limited budget meanwhile social housing projects require buoyant investment, just a few investors participate in the program.
Construction Minister Pham Hong Ha said state budget allocated through Vietnam Bank for Social Policies (VBSP) in the 2018-20 period is more than VND1.2 trillion, meeting 13 per cent of the demand.
In 2018 alone, the bank was supposed to be provided VND500 billion for social housing projects while as per the regulation, the bank has to call for additional amount of VND500 billion for the projects. In other word, the bank must disburse VND1 trillion to the projects
The bank said the fund of VND1 trillion ($43 million) has been given to localities with interest rate of 4.8 percent a year while capital in cities and provinces are in dire demand of VND5 trillion. With the allocation of VND50 billion to two big cities such as Ho Chi Minh and Hanoi, the amount can meet demand of just 150 low-income earners while ten thousands of people are in need of a house in the two cities.
The Ministry of Construction said that by 2020, it needs to build 700,000 apartment to meet more than 1.7 million people in demand of housing while the country has completed 186 projects with 75,700 apartments.
Some projects are sluggish due to shortage of capital after the VND30-trillion housing stimulus package program. Locality authorities said that 206 social housing projects with 168,700 apartments have sluggish progress or stopped. For instance, social housing project at 584 Luy Ban Bich in Tan Phu District or at 35 Ho Hoc Lam in Binh Tan District were delayed due to above-mentioned reason.
The VND1,200 billion housing stimulus package provided by VBSP is just for buyers not for investors.
To ensure the goal of social housing program development in the period 2016-2020, the Ministry of Construction proposed the government to give additional sum of VND3 trillion to carry out the program to 2020.
Aside from that, credit institutions are given VND 3,431 billion to redeem the preferential interest rate. Accordingly, it needs VND 6 trillion for the program, a big amount for the state budget.

By MINH HUY – translated by UYEN PHUONG

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