New points of the revised Housing Law 2023: Students can buy cheap houses

Recently, the 15th National Assembly passed the amended Housing Law on November 27. In a newly published real estate industry analysis report, Vietcap Securities Company pointed out important changes between the 2013 Housing Law and the amended Housing Law 2023.

Land fund for social housing development in commercial projects

In the 2013 Housing Law, the requirement to allocate social housing land in commercial projects is not specifically regulated. However, Decree 49/2021/ND-CP (effective from April 1, 2021) stipulates that investment projects to build commercial housing and urban areas with a land use scale of 2 hectares or more in special and type I urban areas or 5 hectares or more in type II and type III urban areas must reserve 20% of the total residential land area in detailed planning projects approved by competent authorities, and have invested in building technical infrastructure systems for the construction of social housing.

The revised Housing Law 2023 clearly stipulates that the Provincial People's Committee must allocate sufficient land funds for social housing development according to the approved provincial housing development program and plan.

In special, type I, type II and type III urban areas, based on Government regulations, the Provincial People's Committee decides that the investor of a commercial housing construction investment project must reserve a portion of the residential land area in the project that has invested in building a technical infrastructure system to build social housing or arrange the social housing land fund that has invested in building a technical infrastructure system in a location other than the scope of the commercial housing construction investment project in that urban area or pay money equivalent to the value of the land fund that has invested in building a technical infrastructure system to build social housing.

Thus, it can be seen that investors can be more flexible in fulfilling their obligations to develop social housing because they are not required to build social housing inside commercial projects and can choose alternative options such as arranging social housing land outside commercial projects or paying money to local authorities.

Incentives for investors of social housing projects

The 2013 Housing Law stipulates that investors are exempted from land use fees (LETs) and land rent for land areas allocated or leased by the State for investment in the construction of social housing.

However, in reality, some investors need to wait for procedures to determine land prices, calculate land use rights, and land rent before applying for exemption.

According to the 2023 amended Housing Law, investors are exempted from land use fees and land rent for the entire land area of the project. In addition, investors do not have to carry out procedures for determining land prices, calculating land use fees and exempted land rent, and do not have to carry out procedures for requesting exemption from land use fees and land rent.

According to Vietcap's assessment, by clearly stating in the Law that there is no need for procedures to determine land use rights, it will help shorten procedures for investors in social housing projects.

Điểm mới của Luật Nhà ở sửa đổi 2023: Sinh viên được mua nhà giá rẻ - 1 — Investors of social housing projects are given the opportunity to shorten time and increase profit margins (Photo: Hai Long).

Profit margin for investors

The 2013 Housing Law does not clearly stipulate the profit margin for social housing projects, however, more detailed guidance is provided in Decree 100/2015 (effective from December 10, 2015) which stipulates that the selling price of social housing is determined by the project investor based on the calculation of all costs to recover the investment capital for housing construction, loan interest (if any) and the standard profit of the entire project not exceeding 10% of the total investment cost; not including incentives prescribed by the State. The commercial business part must be accounted for in the entire social housing project and ensure the principle of a maximum standard profit of 10%.

The new point in the 2023 amended Housing Law is that investors are entitled to a maximum profit of 10% of the total construction investment cost for the area of social housing construction, and are allowed to reserve a maximum of 20% of the total residential land area within the project area for investment in the construction of technical infrastructure systems to invest in the construction of business, service, commercial and commercial housing works.

The investor of the social housing construction investment project is allowed to account separately, not to include the investment cost of the construction of the service, commercial and commercial housing part in the cost of social housing and is entitled to all profits for the area of the service, commercial and commercial housing; in the case of investing in the construction of commercial housing, the investor must pay land use tax for the area of the commercial housing construction according to the provisions of the law on land.

Thus, investors can gain additional profits from developing social housing through the commercial area.

Expanding the subjects eligible to buy social housing

The 2023 amended Housing Law amends and supplements 2 groups of subjects eligible for social housing support policies.

Firstly, students of universities, academies, colleges, vocational schools, specialized schools as prescribed by law; students of public boarding schools for ethnic minorities.

Second is enterprises, cooperatives, cooperative unions in industrial parks.

Principles of sale, hire purchase, and lease of social housing

According to the provisions of the 2013 Housing Law, the lessee or buyer of social housing is not allowed to resell the house within a minimum period of 5 years from the date of full payment of the lease-purchase or house purchase.

In case within 5 years from the date the buyer or lessee has fully paid for the purchase or lease of the house and wants to sell the house, it can only be sold to the social housing management unit or sold to a subject eligible to buy social housing if this unit does not buy at a maximum selling price equal to the selling price of the same type of social housing at the same location and time of sale.

Under the 2023 revised Housing Law, within 5 years, buyers and hire-purchasers are only allowed to resell to the investor of the social housing construction investment project or to subjects eligible to buy social housing at a maximum selling price equal to the selling price of this social housing in the sales contract with the investor of the social housing construction investment project.

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