A view of Trung Hoa Nhan Chinh residential area. Buyers of low-income houses will soon be able to raise mortgages on their new properties, even when they are not built. — VNS Photo Truong Vi

HA NOI (Biz Hub) — Buyers of low-income houses will soon be able to raise mortgages on their new properties, even when they are not built, according to the Ministry of Construction.

The ministry gave the details on Tuesday of the VND30 trillion (US$1.42 billion) support package set up for the purpose.

In Circular 11/2013 of the State Bank of Viet Nam (SBV), issued in May, people who wished to borrow money from the support package for low-income home purchases must meet minimum capital requirements to be eligible for the loans.

This meant home buyers must borrow money, but current regulations did not allow the use of properties yet to be built as mortgage collateral, the ministry said.

So, allowing buildings still in the planning stages to be used as mortgages would make it easier for low-income earners to access bank loans.

Households or individuals having sale and purchase agreements with developers of social housing after January 7 would be eligible for the support package.

Those who sought loans to buy houses of less than 70sq.m at below VND15 million ($715) per square metre must not own a house or must be living in accommodation at with less than 8sq.m per person.

Beneficiaries of the support package must be residing permanently in the province or city in which they wanted to buy. Those with temporary residence status must participate in social insurance for more than one year.

The support package would be available to investors in social housing projects or projects converted from commercial purposes regulated in Government Decree 71/2010/ND-CP and the Construction Ministry's Circular 02/2013/TT-BXD respectively.

The support package also covered investors of housing projects for students and workers in industrial zones.

The distribution of the support package must be completed within 36 months from June 1.

However, a lack of detailed instructions about the level of low income has caused confusion among banks and borrowers.

Only a few people have received money from the package to date. Vn.express on-line newspaper reported that after nearly one month when the package was officially launched, only one or two low-income earners got support package money from the Bank for Investment and Development of Viet Nam (BIDV) and none from the Bank for Foreign Trade of Viet Nam (Vietcombank).

The ministry recently proposed to apply the same preferential loan to commercial apartments of below 90sq.m instead of only 70sq.m as currently regulated.

Meanwhile, many people still found it difficult to choose low-priced apartment in a development project because they were concerned over its progress and quality.

Nguyen Van Linh from northern Nam Dinh Province, who worked in Ha Noi for three years, was seeking a low-priced apartment in Ha Noi for nearly a month but he had not made up his mind up on which one.

His hesitation stemmed from the poor quality of low-income apartments that some of his friends and relatives had bought and he was also doubtful about the progress of many other projects which remained unfinished.

According to statistics from the Housing and Real Estate Market Management Department, as at the end of May there were 48 commercial housing projects registering to be converted to social housing. In Ha Noi alone, there were 21.

However, many of them were just in their very early stages of procedures and progress was uncertain.

A project at 143 Tran Phu St in Ha Dong District, the first project in Ha Noi to be approved for conversion from commercial to low-income housing in May, had not begun construction although its permit was granted five years ago.

A project on 30 Pham Van Dong, in Cau Giay District, was also just empty land.

A representative from Vinaconex 2 told real investment newspaper Dau Tu Bat Dong San that progress of its Golden Silk project conversion remained unclear because investors were waiting for procedures and paperwork to be concluded and approved.

A representative from one of five banks appointed to implement the loan package was quoted by Dat Viet newspaper as saying that in the first two years, the package should prioritise lending enterprises to complete projects.

He said the current social housing projects were not enough to meet demand. — VNS