Boarding houses

Renting a room is getting more and more expensive

TH (according to VnExpress) May 27, 2024 11:57

Receiving notice that the rent would increase by nearly 1 million VND from June, Duy Khanh has been frantically looking for a new room but has not found one he likes because the rent in the central district is expensive.

Một dãy trọ 20 phòng nằm sâu trong ngõ tại quận Nam Từ Liêm. Ảnh: Ngọc Diễm
A row of 20 rooms located deep in an alley in Nam Tu Liem district

Duy Khanh, a driver for a ride-hailing company, has rented an 18-square-meter house in Nhan My village, Nam Tu Liem district, since the middle of last year. He pays about VND2.5 million per month in rent, including VND2 million for the room, the rest for electricity, water, and service fees. The room was initially unfurnished.

Last month, the landlord added some fire protection equipment and invested in a bed, wardrobe and air conditioner for each room. After the renovation, they announced an increase in the room price to 2.8 million VND, and the electricity bill from 3,500 VND to 4,000 VND per kWh. According to the landlord, "the area has increased, and with more convenient furniture, the price cannot be the same as before."

Calculating that the rent would increase by more than 20%, Khanh wanted to move to a cheaper area. After nearly three weeks of searching in districts such as Nam Tu Liem, Cau Giay, Thanh Xuan... Khanh said it was very difficult to find a room for one person for around 2-2.5 million VND (including electricity, water, and services). Rooms priced under 2 million VND, cheaper than the average, were mostly homestays or sleeping boxes, with an area of ​​8-10 m2 for one bed.

Looking at the room with many sleeping slots like a dormitory to "cram" more people, Khanh felt suffocated and worried about fire safety. With a decrease in income and economic difficulties, the pressure of paying high rent increased, so the male driver turned to find someone to share the room with in his old boarding house to split the rent.

Similarly, Thu Hang and her husband (Cau Giay district) were surprised when the landlord announced that the room price would increase by 20%, to 9 million VND per month, after the rental contract expired this month.

Last year, the couple rented a 25-square-meter room in a mini apartment building on Tran Thai Tong Street, Cau Giay, for 7.5 million VND per month. The landlord said the new interior was of better quality so the price had increased, "if you don't agree, you can move out early, no need to renew the contract".

Ms. Hang said that after the contract of some apartments in the same building expired, the landlord installed additional partitions to divide the rooms and increased the price. Many old tenants did not accept this increase and moved out. After many days of looking for a mini apartment in the central district, she and her husband turned to looking for an apartment in the suburbs, accepting to move far away to have a more comfortable living space.

Since the beginning of the year, many landlords have increased their rental prices by 10-15%, concentrated in central districts such as Cau Giay, Dong Da, Hai Ba Trung, Thanh Xuan... The main reason they gave was the increase in capital costs due to the escalation of inner-city real estate, high investment costs due to additional furniture, and rooms that can accommodate more people (thanks to dividing the space). Many new mini apartment buildings have rental prices of 10-12 million VND per room per month, comparable to apartments in areas far from the center.

The increase in rental prices for rooms and mini apartments is nearly double the annual income growth of urban residents. The results of the 2023 survey on living standards of the population by the General Statistics Office show that the average income in urban areas increased by only 5.3% compared to 2022, reaching nearly 6.3 million VND per person. The growth rate has slowed down compared to the previous year, as the economy continues to face many difficulties.

Một chung cư mini với hàng chục căn hộ tại quận Thanh Xuân, Hà Nội. Ảnh:Tùng Đinh
A mini apartment building with dozens of apartments in Thanh Xuan district, Hanoi

Explaining this development, Mr. Dinh Minh Tuan, Director of Batdongsan channel, said that the demand for housing rental of workers in big cities always remains high. According to the Provincial Governance and Public Administration Performance Index in Vietnam in 2023 (PAPI), Ho Chi Minh City and Hanoi maintain their top positions as the localities that people want to migrate to the most. 22% of them said that the reason for wanting to move to the two big cities is to have better job opportunities.

At the same time, after Tet is often the period of rising prices, including rent. Because this is the time when the new business cycle begins, workers return to find work, leading to increased rental demand.

Data from Batdongsan shows that boarding houses are the only segment that has grown in the rental market at the beginning of this year. Compared to the end of last year, interest in this segment increased by 12-15% month-on-month.

Mr. Tuan said that after many fire incidents in boarding houses and mini apartments that caused serious consequences, it was necessary to tighten fire safety. Therefore, landlords invested in additional fire safety equipment to ensure business standards and included this cost in the rental price to compensate. This has caused the price of boarding rooms to increase rapidly since the end of last year.

To reduce the pressure on boarding houses and mini apartments in the inner city, social housing is considered an effective solution, helping workers rent at low costs, with full facilities and ensuring safety and security. Because the target groups of the two segments above are mainly workers from other provinces, young couples, students, new graduates... are also the target groups of social housing.

Many experts have proposed boosting the supply of social housing for purchase and rent by increasing interest rate and tax incentives and facilitating access to land funds to attract more businesses to invest in this segment.

TH (according to VnExpress)
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Renting a room is getting more and more expensive