A villa in Hoc Mon District, HCM City. Home buyers will be allowed to mortgage their new houses or apartments for loans from the US$1.3 billion housing stimulus package. – Photo phunuonline.com.vn

HA NOI (Biz Hub) — Low-income buyers will be allowed to mortgage their new houses or apartments to access loans from the VND30 trillion (US$1.3 billion) housing stimulus package.

This was announced in a joint-circular by the Ministry of Construction, the State Bank of Viet Nam and the Ministry of Justice.

The move is expected to help low-income groups and stimulate the dormant real estate market, thus improving liquidity, said Minister of Construction Trinh Dinh Dung.

Dung pointed out that the main reason for creating the package was to help low-income groups have their own houses or apartments. He said in the circular that this package would be a breakthrough in regulations as it would allow such home buyers to access loans.

Previously, banks had asked home buyers to provide proof of income and to prove their ability to repay the debt, or home buyers were asked to use other mortgages to borrow money from the package.

Deputy Minister Nguyen Tran Nam added that home buyers would now be required to submit only one certificate from their workplace regarding their housing situation and income, instead of the two certificates that were previously required: one from the workplace and another from the home buyer's residential area.

Nam said the regulation would help home buyers to prepare documents and follow the necessary procedures so that they can speed up the process of buying a house.

He said the ministry would check the validity of the certificates at the buyer's workplace, adding that both the office and the home buyer would be held responsible for their declaration.

Statistics from the ministry showed that by February 17, the central bank had approved lending contracts to 17 realty companies to the tune of VND1.46 trillion ($69.5 million), of which, VND536 billion ($25.5 million) was disbursed to 11 enterprises.

More than 2,270 home buyers are scheduled to receive loans worth a total of VND821 billion ($39 million), of which, VND505 billion ($24 million) was disbursed to 2,261 people.

Speculators benefit

Easy access to loans from the package, highlighted in the recent circular, has also created favourable conditions for property middlemen.

Chu Duy Lanh, a state officer in Ha Noi's Hai Ba Trung District who was eligible for the package, has had difficulty with finding an apartment smaller than 70 square metres with a sale price of less than VND15 million per square metre.

"I will now have to pay an additional VND140-200 million for an apartment, in addition to the selling price in the Kim Van-Kim Lu Social Housing Project in Hong Mai District for property trading floors. The money paid to middlemen before Tet (Lunar New Year) Holiday was only around VND20 million for each apartment," Lanh remarked.

He told Viet Nam News that property middlemen who were eligible for the package at social housing projects had taken advantage of the circular to increase their earnings.

Former Deputy Minister of Natural Resources and Environment Dang Hung Vo said the price hike had proven that the supply of social housing projects was lower than the demand.

Vo noted that the ministry should have a regulation to remove property transactions via trading floors, thus allowing home buyers to buy directly from investors.

In addition, the country should develop the middle- and low-cost apartment segment, he stated. — VNS