The demand for low-income housing has continued to increase in HCM City, but several barriers prevent it from being met. — Photo vietnambiz.vn

These include inadequate policy support, lack of credit access and cumbersome procedures, market observers say.

A study done by the HCM City Development Research Institute estimates 81,000 households and individuals in the city need to rent or buy low-income houses, but very few social housing projects are being carried out in the city.

These include 10,000 households of State employees, 39,000 poor families and 17,000 workers in industrial zones.

Since 2006, city authorities have approved investments in 51 social housing projects with a total volume of 50,000 units, but as of now, just 12 projects have been completed, provide the market with 3,768 units.

To create the good conditions for low-income people to rent or buy houses, the Prime Minister issued Decision 1013/Q-TTg on June 6, stipulating a preferential annual interest rate of 4.8 per cent from the Viet Nam Bank for Social Policies.

The bank has also had other social housing incentives for prospective renters and buyers, but many people have complained that the loans are very difficult to access.

According to existing regulations, the house that is to be bought will be the collateral for the preferential loan, but the bank insists on mortgaging other assets and an income statement.

Few people can meet the bank's requirements so they need policy support to ease access to social housing loans.

Nguyen Thanh Luan, a District 7 resident who works in the advertising industry on a commission basis, says he cannot produce a statement with regular income to satisfy the bank.

Nguyen Thi Lam, a worker in the Tan Thuan Export Processing Zone, said the bank informed her that it had neither the money to disburse nor specific guidelines on sanctioning social housing loans.

Supply target

The HCM City Construction Department has set a target of finishing 39 social housing projects with a total of 44,700 apartments by 2020, but without access to credit, these are not likely to benefit low-income people.

The department said that at present, eight social housing projects in the city have taken preferential loans from the VND30 trillion package introduced in June 2013 by the Government to help rejuvenate stagnant real estate sector.

Capital for three other projects has been raised by the investors on their own.

According to the HCM City Real Estate Association, the city has disbursed VND6.9 trillion (US$306.67 million) from the VND30 trillion-package to 10,525 individuals and households to rent or buy houses; and to seven enterprises for developing social housing projects.

But, the State Bank of Viet Nam decided to close the package from June 1, saying funds for lending contracts signed before March 31 will be disbursed by the end of this year.

Developers' complaints

Le Hoang Chau, the association chairman, said the city should review its land policy for social housing development and issue other policies to attract more investment from enterprises for social housing projects.

He noted that according to a decision by the Ministry of Construction and the State Bank of Viet Nam, credit for social housing projects would only be given to buyers, and not developers.

Only the VND30-trillion package provided loans to both buyers and project developers. So, without a package like that, production costs would be higher, and enterprises would be discouraged from developing social housing projects.

Meanwhile, Truong Anh Tuan, chairman of the Hoang Quan Real Estate Company, said the property firms face many difficulties in developing social housing projects, including slow site clearance and many administrative procedures.

Nguyen Van Duc, deputy director of the Dat Lanh Real Estate Company, said his company had not invested in social housing projects because of high investment and low returns. He said State support, including credit policies, were not satisfactory. Administrative procedures were also costing the enterprises time and money, he added.

Some solutions

The association agrees with the Ministry of Construction that the Government and the Ministry of Planning and Investment should allot between VND500 billion – VND1 trillion from the State Budget in 2016 for social housing projects.

Le Huu Nghia, director of Le Thanh Commercial Construction Co Ltd, said the city authorities should invest in social housing for rent instead of selling, because low-income people typically lived in 10sq.m rooms with monthly rents of VND1.2 - 1.5 million ($55-68).

His company has built 310 apartments with an area of 19-20sq.m per unit with a monthly rent of VND1.5 million in Binh Tan District, he said. While they did not make much profit from renting, they were able to meet the high demand for housing among low-income people, he added. — VNS