Updated  
March, 07 2012 11:03:41

Gov't ponders housing fund to help low-income earners

HA NOI — The Ministry of Construction is considering the establishment of a housing development fund to help low-income earners become home owners.

A draft plan on establishment of the fund is expected to be submitted to the Government by the end of this month.

According to the ministry's plan, among a range of funding sources that include profits from the State lottery, the fund would also receive 10 per cent of fees for land-use rights collected from retail and residential areas along with funds from central and provincial State budgets.

The fund would also receive contributions from fund members who have joined the fund's programme for low-income earners, who can receive loans to help them become homeowners.

Those wanting support can join the fund if they make a down payment of at least 30 per cent of the value of the house or apartment they intend to purchase. Fund members must also contribute money on a monthly basis to the fund for at least five years before getting a loan.

At a meeting held last month by the Central Steering Committee for Housing Policy and Real Estate Market, Deputy Prime Minister Hoang Trung Hai said the establishment of a housing development fund would play an important role in reinvigorating the real estate market by helping to reduce demand for home loans from banks. In regards to the possible establishment of a bank for construction currently under consideration by the Viet Nam Real Estate Association, the Ministry of Construction said the proposal was in line with the country's demands and similar banks already set up in other countries.

The bank was expected to contribute significantly to many national programmes in the field of construction such as apartments and houses for low-income families, students and disadvantaged people and production of construction materials while acting as an effective capital channel for the domestic real estate market, the ministry said.

The construction ministry also asked the State Bank of Viet Nam and other relevant bodies to prepare for the establishment of such a bank.

Deputy Minister of Construction Nguyen Tran Nam said that finding other capital channels for the housing and real estate market was critical this year.

During the past several months, housing developers have found it hard to access loans from banks due to the State Bank of Viet Nam's tightened monetary policies, leading to fewer housing projects.

However, Dang Hung Vo, former deputy minister of Natural Resources and Environment, told the online newspaper VTC News that it was not the right time to establish a bank for construction as it would not effectively help finance the ailing domestic real estate market.

He said the bank should be established only when the real estate market was booming, as this would ensure effective funding sources for the bank's operations. Only when the bank was already running efficiently could it help reinvigorate an ailing market.

The biggest challenge now was a shortage of capital for the bank's operations as housing developers face many difficulties or were going bankrupt due to the central bank's tightened monetary policies and the stagnant market, said Vo.

He said the real estate market would continue to face a shortage of capital this year, adding that the market may improve in the third quarter when banks' liquidity problems were expected to partially ease. — VNS

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