Saturday, October 29 2016


No income statement required in affordable housing scheme

Update: June, 18/2015 - 08:52

Nguyen Manh Ha, Head of  the Construction Ministry's Housing and Property Market Management Department, tells Vietnam News Agency that housing development will be a key component of national socio-economic development policies and plans for the next five years.

Will you please explain why the government's low interest VND30 trillion (US$1.41 billion) loan package for home buyers and property developers has been implemented at snail speed?

There are various reasons, but the first reason I want to emphasise is that this loan package does not come out of the State budget. It comes from a refinancing scheme between the State Bank of Viet Nam and commercial banks through re-lending practices.

The VND 30 trillion loan package is designed for three types of borrowers — Government officials and public employees; people serving in the armed forces; and workers or employers with low incomes or those without houses of their own. The loans are either given to support potential home owners or potential housing developers.

Conditions for approval of the loan package depend on whether they are considering commercial houses or low-income housing (affordable homes).

Commercial buyers do not have to declare their monthly income. The only thing they have to show is the certification of their current housing status. As I mentioned above, people in this group, cannot enjoy the same benefits as those in the affordable housing scheme.

For people buying affordable homes, the central requirement is that they must have regular monthly incomes that are charged personal income tax. They must also show their household registration and incomes before they enter into a contract to buy a home.

By May 31, 2015 the loan package has assisted in supporting contracts worth a total VND 14.161 trillion- it is about a half of the loan package. However, the actual amount of the disbursed money was only VND 7.621 trillion, 25.4 per cent of the contracts' value. The key reason for the low amount of disbursement is that much of the disbursement depends on development projects' construction process.

One thing I have to concede is that the implementation of the VND30 trillion loan policy has faced quite a number of challenges. One difficult hurdle is that someone wishing to purchase a home with a loan must already have a contract to buy or lease the apartment from a housing developer or a landlord. In other words, the products – apartments and homes- must meet all the conditions set out by the loan scheme.

At present, in some localities, particularly Ha Noi or Ho Chi Minh City, the number of affordable houses or commercial houses sold at a price less than VND15 million/per square meter, around $48,000 per apartment, are hard to find.

In addition, developers of housing projects that want to apply for the loan package, must satisfy a few conditions themselves- no bad debt and having capital resources equal to at least 30 per cent of the loan.

What measures will the Ministry of Construction adopt to accelerate the development of affordable housing projects in the near future?

To increase the supply of affordable housing, as mandated by the National Strategy for Housing Development for 2020, the Ministry of Construction is now in the process of writing a decree to support implementation of the 2014 Housing Law.

To speed up the disbursement of the VND30 trillion loan package, the Ministry of Construction needs support and co-operation from other ministries and sectors to make amendments to financial, credit or tax policies.

In addition, the ministry will continue to review existing applications for the loan package so as to get the loans out as soon as possible. Viet Nam set a target of building 10 million square metres of social housing, mainly apartment buildings, by 2015 to meet low income earners' demands. It would also provide support for 400,000 poor families in rural areas who are in need of homes. — VNS

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