The proposed package includes a sharp reduction in loan interest rates to 2-4% per year, extending loan terms to up to 25 years, and flexible payment methods to suit low-income earners.
Policy barriers to social housing
Although the demand for social housing is increasing, especially in large cities and industrial zones, the actual implementation is still at a standstill.
One of the biggest barriers today is the 10% profit ceiling for social housing investors, which is considered too low in the context of continuously escalating input costs from raw materials to labor.
Many localities have not even proactively allocated budgets to support compensation and resettlement - which is the key step to untangling implementation bottlenecks. This has discouraged many investors, especially in the context of frozen financial costs due to prolonged waiting for procedures.
Notably, the 2023 Housing Law and Decree 100/2024/ND-CP have given localities the right to proactively arrange land funds for social housing development, in three forms: reserving 20% of land funds for commercial projects, arranging in other land areas, or paying equivalent money.
However, the unclear application conditions have caused confusion in many localities, leading to the choice of the least risky option - forcing commercial investors to reserve 20% of their land fund for social housing.
In particular, not only is the procedure stuck, social housing is also stuck in capital. Current credit packages supporting the development of social housing are mainly short-term, without a stable long-term financial mechanism. Lack of budget capital, lack of medium- and long-term preferential capital from financial institutions makes businesses unable to implement projects.
Difficulties of social housing buyers
Even people in need find it difficult to access loans to buy social housing. According to regulations, borrowers are only supported up to 80% of the apartment value, the rest must be self-funded, which is not easy for workers with below-average incomes.
Freelance workers are even more disadvantaged when the locality does not have specific guidance on income verification, leading to their applications being rejected. Not to mention, many social housing areas are planned in remote areas with poor infrastructure and inconvenient transportation, making workers hesitant to move there.
Proposal for unprecedented home loan package for low-income people
In the context of the ever-increasing demand for social housing, the Vietnam Real Estate Association (VNREA) has just sent a report to the National Assembly Standing Committee and Deputy Prime Minister Tran Hong Ha to remove bottlenecks, clear the flow of investment and consumption, and turn social housing into a real pillar of social security policy.
To make social housing truly attractive to investors, financial incentive policies need to be designed more strongly and sustainably. VNREA proposes to reduce loan interest rates for investors to only 3-4% per year for sale projects and 2-3% per year for lease projects, with a minimum loan term of 20-25 years to reduce financial pressure throughout the project life cycle.
For the people, it is necessary to apply an interest rate of less than 4% per year, a loan term of 23-25 years, combined with a flexible installment model to suit the payment capacity of low-income groups. This is considered an unprecedented proposal in the social housing sector in Vietnam.
At the same time, enterprises investing in social housing should have their value-added tax (VAT) reduced to only 0-3%, instead of the current 5%. In addition, VNREA emphasized the role of mobilizing more capital from the Local Development Investment Fund, government bonds and socialization to increase the sustainability of capital sources.
In fact, the preferential credit package of 120,000 billion VND announced from 2023 to date has only disbursed less than 5%, mainly because the actual interest rate is still high and the loan term is too short, making both businesses and home buyers hesitant.
To have a project, there must be land. VNREA recommends that each locality should make a specific list of social housing projects, prioritizing the allocation of clean land with full infrastructure, avoiding the situation of land allocation on paper, or arranging social housing in remote areas lacking amenities.
Planning social housing in locations with convenient transportation and infrastructure will help workers easily access and live, thereby increasing the effectiveness of social housing policies. This is also an important factor to attract investors' attention in developing quality social housing projects.
Source: https://baonghean.vn/vnrea-de-xuat-goi-vay-mua-nha-lai-suat-thap-chua-tung-co-10301557.html
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