Need to remove barriers to develop social housing

The biggest barrier currently for businesses doing social housing is legal procedures.

According to the report of the Management Board of Ho Chi Minh City Export Processing and Industrial Zones (Hepza), the land fund for investment in the construction of social housing and accommodation for industrial park workers is planned to be located in residential areas adjacent to the industrial park. However, for new industrial parks with adjacent residential areas planned to serve the industrial park, progress is behind schedule due to problems with compensation for site clearance, legal issues regarding land allocation and lease, approval of investment policies and recognition of investors (investors) of adjacent residential areas, leading to the fact that industrial park infrastructure investors do not have resettlement land for people...

Hepza's report shows that currently, the demand for social housing for workers and laborers in Ho Chi Minh City is very large. Of which, the number of workers with a need to rent social housing is up to 51,718 people/96,517 surveyed people, accounting for 53.6%; the number of workers with a need to buy social housing is up to 29,034 people/96,517 surveyed people, accounting for 30.1%... Although the demand for social housing for workers and laborers is very large, the progress in handling issues related to social housing is still very slow.

Similarly, the report of the Ho Chi Minh City Department of Construction also shows that the total housing demand in Ho Chi Minh City in the period of 2021 - 2030 is about 37 million square meters of housing floor. Of which, the main demand for housing for low-income people in urban areas is about 15 million square meters of housing floor, workers working in industrial parks/industrial clusters in the city is about 12 million square meters. To meet this housing demand, the land fund needs 451 hectares, with construction investment capital of about 86,400 billion VND.

However, that is only the demand, in reality, in the period of 2021 - 2030, Ho Chi Minh City is forecasted to develop only about 6.58 million m2 of social housing floor, equivalent to about 93,000 apartments. With that number, Ho Chi Minh City's maximum development of social housing supply in the period of 2021 - 2030 will only meet 17.8% of people's needs, of which the type of worker accommodation will only meet nearly 6% of the demand.

According to experts, there are many reasons for the difficulties and barriers in developing social housing. Among them, the legal procedures related to site clearance, project approval and construction licensing are still complicated. This prolongs the time for investors to complete legal procedures up to years, slowing down the goal of developing social housing. According to the preferential regulations, social housing projects will be exempted from land use fees, but still have to have the land appraised before being exempted to "0 VND", which causes unnecessary delays.

Mr. Le Huu Nghia - Director of Le Thanh Trading Company Limited, a business specializing in social housing, said: The project to build 1 million social housing units will be difficult to reach the finish line if administrative procedures remain stuck and are not amended. Among the problems that businesses encounter when implementing a social housing project, obstacles and difficulties related to administrative procedures account for 70%. This situation does not encourage and prevents the social housing construction program from being accelerated despite the determination of businesses.

“Despite policies on capital and interest rates, the progress of removing obstacles and providing legal support for social housing projects is slow, and there is a lack of projects that meet legal requirements. Even if the project meets the requirements, it is still very difficult for businesses to access and disburse capital. Currently, some banks apply an interest rate of 8.2%/year to project investors and 7.7%/year to customers borrowing under the VND120,000 billion package. This is still too high compared to the financial capacity of low-income people,” said Mr. Nghia.

Sharing the same view, Mr. Le Hoang Chau - Chairman of the Ho Chi Minh City Real Estate Association (HoREA) commented: Currently, there are very few businesses participating in the construction of social housing because the profit is too low compared to commercial housing, while the barriers and risks are greater. Besides, there are many difficulties in procedures, compensation for site clearance, loans... In Ho Chi Minh City, most social housing projects are still on paper, leading to market demand but supply not being able to meet it. It is a fact that the real estate market has an excess of apartment projects in the high-end segment, while there is a lack of commercial housing projects and social housing projects with prices suitable for people's needs and incomes.

"Currently, the most important thing is to remove obstacles and difficulties in mechanisms and policies, create land funds, and create preferential credit sources for social housing to support buyers and renters of social housing; at the same time, preferential credit for buyers and renters of social housing to borrow at low interest rates - the current regulation is 4.8% - 5%/year and long-term loans - the current regulation is a maximum of 25 years - is the main and most important policy in social housing policies" - Mr. Chau analyzed.

Source