Refer to the "rent to own" model of social housing

Low-income home loan interest rates remain high

According to a representative of the State Bank of Vietnam (SBV), there are currently 30 projects nationwide in need of loans from the VND120 trillion credit package to build social housing. So far, banks have only disbursed VND640 billion for projects and VND6 billion for homebuyers.

Although the Ministry of Construction has issued guidelines to determine the list of projects participating in the 120,000 billion VND package with many criteria to cut down on the implementation of compensation policies for site clearance and construction licensing, the implementation of this package to "accelerate" effectively is still "deadlocked".

Meanwhile, the development of social housing in many localities is limited. Many provinces and cities such as Hanoi, Ho Chi Minh City, Da Nang, Can Tho, Long An... have low implementation rates compared to the project's targets, despite having many industrial parks.

Investors shared: The procedures to borrow a credit package of 120,000 with the condition of having collateral are difficult to meet. Not only that, the loan interest rate, short loan period... are barriers for investors.

In a report to the National Assembly, Minister of Construction Nguyen Thanh Nghi admitted that the reason for this situation is that many localities have not fully announced the list of social housing projects eligible for credit packages; nationwide, there are 129 social housing projects that have started construction, but only 28 localities have announced 68 projects eligible for loans.

In addition, many investors do not meet credit conditions, do not guarantee credit balance conditions, do not have other assets to secure credit, have borrowed from other credit institutions... In addition, preferential loan interest rates of about 8% apply to investors and 7.5% for home buyers, making many people "uninterested". Even the preferential period is short, only lasting 3 - 5 years...

Economist, Associate Professor, Dr. Dinh Trong Thinh said: The State Bank needs to continue researching and considering lowering the lending interest rate for the VND120,000 billion support capital source in accordance with practical conditions in each period, and unifying clear, public, and transparent regulations on investors eligible for the loan package.

The Ho Chi Minh City Real Estate Association (HoREA) proposed that the State Bank of Vietnam add a preferential loan package of VND120,000 billion for buyers of commercial houses under VND3.5 billion/unit (about VND35 million/m2); at the same time, it proposed that the Ministry of Construction and the State Bank of Vietnam restore the VND110,000 billion credit package for buyers and renters of social housing. This package is only equal to 30% of the total capital demand to implement the program of developing 1 million social houses by 2030, with preferential interest rates of 4.8 - 5%/year for a maximum period of 25 years.

Social housing rent-to-own model

Recently, housing prices in big cities have increasingly exceeded the affordability of people. CBRE experts (the world's largest commercial real estate investment and trading company) suggest: Vietnam can refer to the rent-to-own model that has been successfully applied in the world.

According to Ms. Duong Thuy Dung, Executive Director, Head of Valuation, Research and Consulting Department of CBRE Vietnam, Vietnam currently has no investors implementing the model of renting to own social housing. In some countries in the world, instead of offering apartments for sale to buyers, investors allow people to rent for a period of 1 - 3 years, in the rental agreement, there is a clause allowing them to buy. Thus, during those 3 years, people in need will have more opportunities to accumulate and choose.

Singapore has developed this model effectively in the development of social housing. “What makes social housing successful in Singapore is the Central Provident Fund (CPF),” Ms. Duong Thuy Dung emphasized. This is a Fund designed to support people in buying houses, health care and retirement savings. The Fund's capital will come from contributions taken from the income of employees and employers. “In order for the Fund to operate successfully, the Singapore Government has developed reasonable regulatory policies. For example, people are only allowed to use the money in the fund to buy a maximum of 2 social housing units. When reselling, the price is not allowed to be as high as that of a commercial housing project,” said a representative of CBRE Vietnam.

Mr. Nguyen Hoang Nam, General Director of G Home, commented that the 120,000 billion credit package will be difficult to succeed. “Developed countries also have credit support packages for social housing similar to Vietnam. However, the level of incentives is very different. For example, in France, the government has a preferential loan for buying social housing called Prêt Logement Accession. This package allows low-income people to borrow at an interest rate of only about 0.5 - 2%/year. The loan term lasts up to 15 - 20 years. Depending on each case, the interest rate and loan term will change accordingly,” said Mr. Nguyen Hoang Nam.

According to Ms. Duong Thuy Dung, currently a bank home loan lasts about 10 - 15 years and after the third year, floating interest rates apply. Meanwhile, floating interest rates in Vietnam are often high, which is what "hinders" most real estate buyers.