Social housing

Proposal to issue 100,000 billion VND in social housing loan bonds

TH (according to VnExpress) December 2, 2024 05:48

The Government proposed implementing a 100,000 billion VND incentive package for social housing loans from bond capital, applicable for 5 years.

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Dinh Hoa Social Housing Area, Thu Dau Mot City, Binh Duong, July 2023

According to the draft resolution currently being consulted, the preferential credit package of 100,000 billion VND for loans to buy, rent, and build social housing will be implemented until 2030. In the period 2025-2029, each year the resources needed to allocate for this preferential package are about 16,500 billion VND. In 2030 alone, the capital needed is 17,500 billion VND.

The Ministry of Finance is assigned to study the resources for this package from the issuance of government bonds. The Vietnam Bank for Social Policies must develop a project to issue bonds guaranteed by the government and submit it to the competent authority for approval. This agency also needs to prioritize the allocation of the 100,000 billion VND stabilization package and report the results quarterly.

The loan criteria and conditions of the package are applied according to Decree 100/2024. Accordingly, people can borrow up to 80% of the value of the contract to buy or hire-purchase social housing. In case of new construction or repair of houses, the maximum loan amount is 70% and not more than 1 billion VND. The interest rate is equal to the lending rate for poor households prescribed by the Prime Minister, for example, currently this rate is 6.6% per year. The maximum loan term is 25 years.

In the draft resolution submission, the Ministry of Construction said that the Government’s project to build one million social housing units by 2030 requires resources of up to VND500,000 billion. Of this, about 50% of the loan demand belongs to home buyers, equivalent to VND250,000 billion.

However, currently, there is only a VND120,000 billion package that commercial banks have proactively balanced with budget capital through the Vietnam Bank for Social Policies. Compared to the capital demand for social housing development until 2030, the VND120,000 billion package accounts for about 24%. Therefore, more preferential credit packages are needed to ensure the goal of having 1 million social housing units nationwide in the next 5 years.

The ministry estimates that the VND100 trillion incentive package accounts for about 20% of the total capital demand for developing this type of housing by 2030.

In fact, the recent disbursement of the VND120,000 billion credit package for social housing has not been effective. The disbursement rate has only reached nearly 1%, or about VND1,344 billion. Of this, about VND1,295 billion is for investors in 12 projects, the rest are home buyers. Many businesses and buyers reflect that the interest rate is still high while the preferential interest rate period is short, within 3-5 years.

Previously, in the report on real estate market management and social housing in the 2015-2023 period, the National Assembly's supervision delegation assessed that the implementation of the project to build one million social houses did not meet requirements, and most localities had not completed the target.

According to the report, the implementation is still passive, because the budget has not been adequately allocated. Therefore, most of the construction projects using non-state resources are built by enterprises or cooperatives. While in reality, many enterprises in industrial parks are not interested in building houses for workers.

TH (according to VnExpress)
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Proposal to issue 100,000 billion VND in social housing loan bonds