Are Social Housing Buyers About to Get a Boost?

VND 1,650 billion needed by 2025

According to the Ministry of Construction, the resolution aims to ensure funding for the investment project to build at least 1 million social housing units for low-income earners and industrial park workers for the period 2021-2030. It also aims to provide housing for all, especially those with social policies, low-income earners, and the poor who are struggling to find accommodation. This will contribute to political stability and social security.

The Ministry of Construction revealed that to implement the Government’s project to build 1 million social housing units during the 2021-2030 period, a massive amount of VND 500,000 billion is required. Therefore, the Ministry is drafting a resolution on a preferential credit package of VND 100,000 billion for the Vietnam Bank for Social Policies to lend for buying, renting, building, renovating, and repairing social housing.

The interest rate for this preferential credit package of VND 100,000 billion for social housing purchase will be the same as the interest rate for poor households decided by the Prime Minister for each period. The disbursement period for this preferential credit package will last until the entire package is disbursed, but not beyond December 31, 2030.

The allocation and disbursement of the preferential credit package for social housing development are expected to be as follows: VND 1,650 billion will be allocated for 2025; VND 1,650 billion for 2026; VND 1,650 billion for 2027; VND 1,650 billion for 2028; VND 1,650 billion for 2029; and VND 17,500 billion for 2030.

To implement the preferential credit package of VND 100,000 billion, the Ministry of Construction proposed that the Government assign the Ministry of Finance to carefully and specifically assess the ability to issue Government bonds to provide capital for the Vietnam Bank for Social Policies to lend for buying, renting, building, renovating, and repairing houses.

According to the draft, it is proposed that the Ministry of Planning and Investment coordinate with the Ministry of Finance and other relevant ministries and sectors to allocate government bond capital for social housing development. During the appraisal of investment policies for industrial park infrastructure projects, the allocation of land funds for the development of worker housing in accordance with the Law on Housing must be considered.

For the State Bank, the Ministry of Construction proposed that the Government assign this agency to coordinate with the Vietnam Bank for Social Policies to review and remove difficulties and obstacles to effectively implement the program to support social housing loans.

The Vietnam Bank for Social Policies will develop a plan to issue bonds guaranteed by the Government, submit the dossier requesting a government guarantee to the Ministry of Finance for submission to the Prime Minister for approval, and manage the capital source in accordance with regulations.

The Ministry of Finance and the Ministry of Planning and Investment will prioritize allocating VND 100,000 billion for projects to develop social housing and for homebuyers.

Localities must have specific mechanisms and solutions to shorten administrative procedures related to project establishment, approval, land allocation, land lease, site clearance, and investment in construction to support and encourage enterprises to implement investment projects, create supply for the market, and take advantage of preferential capital for social housing development.

What about the previous social housing loan packages?

This is the first time the Ministry of Construction has proposed a social housing package through the issuance of bonds. Currently, social housing uses two capital sources: the VND 120,000 billion package provided by commercial banks from their own capital sources and the capital source implemented by the Vietnam Bank for Social Policies according to Decree 100 on social housing from the state budget.

According to the Ministry of Construction, the credit package of VND 120,000 billion for investing in and buying social housing has an interest rate that is 1.5-2% lower than the average commercial interest rate of the four state-owned commercial banks during the same period. However, after more than a year of implementation, the disbursement rate of this preferential credit package of VND 120,000 billion is very low because the interest rate and loan conditions are not really favorable for low-income earners in urban areas and industrial park workers.

Currently, the interest rate for this package is 7%/year for investors and 6.5%/year for homebuyers. As of the end of the third quarter of this year, the total outstanding balance was VND 1,783 billion, of which eligible corporate customers had 15 projects with a total committed credit of VND 4,200 billion and an outstanding balance of VND 1,633 billion.

There are 68 projects that have not yet signed credit contracts for the VND 120,000 billion program, including 57 projects where investors do not need loans and 6 projects that are being appraised by commercial banks, and 5 projects that do not meet the lending conditions.

For homebuyers, by the end of the third quarter, the VND 120,000 billion package had disbursed about VND 150 billion for homebuyers in 12 projects.

Meanwhile, the interest rate for loans from the Vietnam Bank for Social Policies is 6.6%/year, which is still considered high compared to the payment capacity of the people.