Need strong enough incentive policies to develop low-cost rental housing

Lack of rental housing segment suitable for low-income people

The rental housing market in Vietnam has been established for a long time and is currently undergoing a period of significant changes. It is influenced by the trend of rapid urbanization, the pressure of increasing real estate prices, and the shift in home ownership models of young people. Real estate prices for living or investing in big cities are increasing rapidly, making home ownership more difficult for most workers. As a result, the long-term rental model has become more popular, instead of buying to live, many people choose to rent to maintain flexibility and reduce financial pressure.

However, the housing rental market in Vietnam is facing some notable challenges. Apartment prices in Hanoi have increased by more than 72% in the past 5 years, pushing up rental prices. Specifically, the rental price of two-bedroom apartments in areas such as Linh Dam or Dinh Cong will increase to about 8.5 - 10 million VND/month in 2025, about 1 million higher than at the end of 2024; meanwhile, average income only increases by about 6-10% per year.

*The low-cost housing market in Hanoi has continuously received good news from social housing projects that have been started and granted construction permits. Illustrative photo*

Despite the increase in demand for rentals, rental yields have fallen as purchase prices have increased faster than rental prices. This has led many investors to switch to buying to sell rather than buying to rent. Furthermore, with rental prices accounting for 35-50% of the average worker’s income in large cities, affordability is becoming increasingly stressful.

It is worth mentioning that the rental housing market is mainly developing in two segments: Apartments in high-end projects, professionally managed and small houses or apartments, rented by individual landlords. There is almost a lack of quality rental housing segment suitable for low-income and middle-income people and professionally managed.

In reality, investors often focus on developing high-end apartments for sale, instead of developing projects for rent. After the project is sold out or stalled, the rental market is often left open. As for the small apartment segment, rented by individual owners, with lower prices but lacking professionalism, not ensuring safety and security standards, it is mainly suitable for freelancers, students, etc. Meanwhile, the rental demand of young workers and new employees is still very large. In fact, the supply of quality professional rental housing suitable for low- and middle-income people is very limited.

Need strong enough incentive policies

According to experts, the rental housing market in Vietnam has both opportunities and challenges and needs supportive solutions for stable and sustainable development.

In fact, in recent times, the development of social housing has been identified by the Party and the State as a political determination and an important task of the Party and the entire political system, demonstrating the characteristics and good nature of our regime. The Government and the Prime Minister have resolutely directed and implemented many tasks of developing social housing; issued 22 Resolutions, 12 Directives, Decisions, and Official Dispatches; organized many national conferences to implement the development of social housing...

On the morning of October 24, Prime Minister Pham Minh Chinh , Head of the Central Steering Committee on Housing Policy and Real Estate Market, chaired a conference with ministries, branches, localities and enterprises on breakthrough solutions for social housing development. At the meeting, delegates focused on discussing and contributing ideas to the draft new Resolution of the Government on implementing a number of breakthrough solutions for social housing development in the coming time, especially assigning a number of enterprises to be investors in social housing projects.

Delegates discussed the role of state management in social housing development; the role of localities, especially in land allocation and site clearance; real demand for social housing; resources and credit sources for social housing; preferential policies for social housing projects; selling and renting prices of social housing, etc.

However, many experts believe that the development of professional rental housing still lacks strong enough incentive policies regarding taxes, capital, and land funds. Therefore, most rental housing is done by individuals, lacking large projects and professional exploitation.

According to experts, real estate associations, the State needs to support the development of professional rental housing such as: Providing tax incentives, capital support or creating a long-term rental fund for civil servants and workers in industrial zones. Developing rental housing segments suitable for low and middle incomes right in urban areas or suburban areas, and adjusting planning and land to encourage investors to invest in leasing instead of just selling.

At the same time, improve the quality of rental services: Professional management, transparency of rental contracts and housing conditions. This will help tenants feel secure, reduce risks and improve market efficiency. Balance supply and demand between segments: high-end housing, if surplus, needs to be regulated, while the affordable segment needs to be prioritized for development.

For the rental housing market, especially the quality segment suitable for low and middle income earners to develop stably, sustainably and serve the majority of people, there needs to be support from policies, strategic investment from investors and improvement of the quality of rental housing services. If this can be done, rental housing can become an important solution to the urban housing problem for Vietnam in the next decade.

Source: https://congthuong.vn/can-chinh-sach-uu-dai-du-manh-phat-trien-nha-o-cho-thue-gia-re-429131.html