The 2023 Housing Law has many preferential policies for investors implementing social housing projects. However, is this "piece of cake" really attractive to investors?
Offer not feasible
According to the provisions of the Housing Law 2023 and detailed regulations and implementation instructions, investors of social housing projects are entitled to 6 incentives: Exemption from land use fees and land rent for land areas allocated or leased by the State for investment in social housing construction; exemption and reduction of value added tax and corporate income tax; preferential loans from social policy banks and credit institutions operating in Vietnam; full or partial support for investment in construction of technical infrastructure systems within the scope of social housing construction projects; reserving 20% of the total land area for housing construction within the scope of social housing construction projects for investment in construction of commercial business facilities; reserving 20% of the total floor area of houses of social housing construction projects for sale, lease, and hire-purchase at commercial business prices.
In reality, the implementation of this preferential policy has encountered many difficulties, failing to encourage and attract investors to participate in the development of social housing.
Specifically, to be exempted from land use fees and land rent for land areas allocated or leased by the State for investment in social housing construction, investors must carry out procedures to determine the exempted amount of the exempted land area, leading to prolonging the project implementation time and affecting the interests of investors.
A representative of a company that has implemented a social housing project in Hai Duong said that currently, investors building social housing cannot mortgage the project but must mortgage other assets, which is a problem. Access to preferential capital sources and loan procedures from preferential credit packages of the Social Policy Bank are difficult to implement, leading to investors having to borrow from commercial banks at high interest rates, leading to high social housing prices.
In particular, incentives for investors are not attractive enough. Currently, the regulation on profit of social housing projects is only 10% while many projects are delayed, which will cause great losses for investors. "For social housing projects, the State decides the selling price and the eligible buyers, while the enterprise is the one who has to spend money to build but cannot decide. If the project is sluggish, the investor will not make a profit," said a representative of this enterprise.
Or, for example, social housing projects are entitled to incentives to increase the land use coefficient or construction density to a maximum of 1.5 times, but according to the representative of this enterprise, the above incentives for Hai Duong are not practical. The reason is that the land fund for social housing of most projects ensures the construction of works, investors are also afraid to increase the construction because the risk of not being able to sell all is very likely to happen. Not to mention that requesting to adjust the number of floors is also time-consuming, affecting the progress of the entire project.
On the other hand, the procedures for investing in social housing construction projects are still complicated and lengthy, and some regulations overlap and lack consistency, leading to congestion in project implementation.
One of the points that businesses are interested in is the preferential policy for investors to reserve 20% of the total floor area of social housing projects for sale, lease, and hire-purchase at commercial prices. Representatives of some real estate investment businesses all commented that this incentive is only suitable for large cities such as Hanoi and Ho Chi Minh City. In Hai Duong, social housing projects are not located in the urban center, so it is very difficult to rent, and if sold, they have to pay very high land use fees, not to mention having to wait for approval of the selling price, which takes a lot of time.
What support does the province provide?
According to the provisions of the Housing Law 2023, the Provincial People's Council, based on local conditions, shall issue a mechanism to support the implementation of social housing investment projects within the locality in accordance with its authority and other relevant legal provisions. Currently, Hai Duong province is soliciting comments on the draft resolution of the Provincial People's Council regulating the mechanism to support the implementation of social housing investment projects in the province. This content is expected to be considered at the regular year-end session of the 17th Hai Duong Provincial People's Council taking place in early December.
According to option 1 in the draft, the province will consider supporting all compensation and site clearance costs within the scope of social housing construction investment projects in Chi Linh City and communes in Hai Duong City. Funding will not be supported for social housing construction investment projects in areas within the scope of wards in Hai Duong City.
Support all compensation costs, site clearance and investment costs for construction of site leveling items to the design level according to the detailed planning approved by competent authorities within the scope of social housing construction investment projects in the area of Kinh Mon town and the remaining districts.
Option 2: Support all compensation and site clearance costs within the scope of social housing construction investment projects in the province.
Currently, Hai Duong province does not have a mechanism to support compensation costs, site clearance and investment costs for construction of site leveling items for social housing construction projects.
Regarding the method and funding support, in case the land for investment in social housing construction is within the planning scope of the commercial housing construction investment project, the investor of the social housing construction investment project is assigned a clean site to implement the project.
However, with option 1, many real estate businesses believe that such support is not suitable. Because social housing projects implemented in places far from the center, such as in Hai Duong City, if implemented in the communes, will be very difficult to sell, while not being supported will cause difficulties for businesses.
Hai Duong currently has a huge demand for social housing due to the increasing number of migrant workers and rural workers moving to urban areas and the difficulty for low-income people to access real estate on the market. The issuance of a specific support mechanism will contribute significantly to the completion of social housing development targets for the 2023-2030 period, ensuring sustainable development of social security.
Progress of social housing projects in Hai Duong
At the meeting on November 26, 2024, after listening to the Department of Construction (the standing agency of the Provincial Steering Committee for Social Housing Development) report on the results of implementing social housing projects in the province, and the opinions of the members of the Steering Committee and the Standing Committee of the Hai Duong City Party Committee, Chi Linh, and Cam Giang District Party Committee, Comrade Tran Duc Thang, Member of the Party Central Committee, Secretary of the Provincial Party Committee, Head of the Steering Committee requested localities to urgently speed up the progress of implementing social housing projects.
Accordingly, the Social Housing Project of the New Urban Area Project in the South of Hai Duong City (4 blocks of 8-storey buildings, 336 apartments) must be completed and put into use before June 30, 2025.
Ta Quang Buu Apartment Complex Project (390 units), completed investment and construction procedures and selected a construction contractor in the fourth quarter of 2024.
Social Housing Project belongs to the Residential Area Project, workers' housing and
Tan Truong Industrial Service, Cam Giang (expected 1,165 units), detailed construction planning approval (adjustment) in November 2024; complete construction investment procedures and select construction contractor in the first quarter of 2025.
2 projects in Cam Giang district (Workers' housing project in Cam Dien - Luong Dien new residential area, expected to have 380 units; Social housing project in Ghe commercial and service area, Tan Truong commune, expected to have 400 units) and 3 projects in Hai Duong city (Social housing project in Ngoc Chau residential area, expected to have 760 units; Social housing project in lot 1- C2 of Thai Binh Ecoriver riverside ecological urban area project, expected to have 715 units and Social housing project in Phu Quy urban area, Hai Duong city, expected to have 1,275 units), approved detailed construction planning (adjusted) before December 15, 2024; complete construction investment procedures and select construction contractors in the second quarter of 2025.
Social housing project in Trai Bau residential area, Le Thanh Nghi ward, Hai Duong city (expected 230 units), construction started in May 2025.
Social housing project of Tan Phu Hung Urban Area Expansion Project (1,479 units), in November 2024, the decision on investment policy for construction was approved and construction started in January 2025.
Social housing project in the new urban area east of Chi Linh city (expected 740 units), detailed construction planning approved (adjusted) in December 2024; construction started in the first quarter of 2025.