Focus on implementing the Project to invest in building at least 1 million social housing units for low-income people and industrial park workers in the 2021-2030 period.
Prime Minister Pham Minh Chinh has issued Official Dispatch No. 130 on urging focused direction and timely removal of difficulties and obstacles to promote the implementation of social housing projects . The Prime Minister requested relevant ministries, branches and provinces and cities to continue to effectively implement key solutions and tasks to promote decentralization, decentralization, reform, and minimize administrative procedures , creating favorable conditions for businesses to participate in investing in social housing development , and for beneficiaries to access social housing.
The dispatch emphasized the need to focus on implementing the Project “Investing in the construction of at least 1 million social housing units for low-income earners and industrial park workers in the 2021-2030 period”. A number of specific solutions and requirements have been set forth such as: Cutting administrative procedures, allocating land funds, publicizing social housing projects eligible for loans from the 120,000 billion VND package with preferential interest rates , selecting investors for social housing projects in a streamlined manner, ensuring speed, convenience, publicity and transparency.
Currently, some localities are accelerating the development of social housing projects, especially in large cities or localities with many industrial parks. The latest report from the Hanoi Department of Construction shows that the city is expected to have 19 projects completed in the 2021-2025 period, reaching about 78.3% of the target in the city’s development plan. Some social housing projects in beautiful locations have been and are preparing to start construction. According to experts, if the number of social housing is increased, it will become a counterweight to high-priced commercial housing projects , which is one of the important solutions to reduce housing prices.
Developing social housing to cool down apartment prices
In early 2023, the social housing project in Nam Tu Liem district was approved by the Hanoi Department of Construction at a price of 19.5 million VND/m2. This is the highest price ever for social housing in the capital. It is called the highest, but compared to the general price level of apartments, this is the lowest price. Because currently on the Hanoi market, there are no more apartments priced at 20 million VND/m2.
Just a few steps away, the commercial housing project in 2023 has a selling price of more than 40 million VND/m2. Up to now, many apartments have been sold for up to over 60 million VND/m2. That is, the price of a social housing apartment is only 1/3 of the price of a commercial housing apartment. With the same location, the same infrastructure and the same traffic conditions, this also explains why social housing is so anticipated by people.
“Prices and land prices have all gone up. If I can’t buy a house, I have to rent one. Now that there is a program for low-income people to move to a certain area, I’m even happier,” said Mr. Nguyen Cong Vy, Hanoi.
Research by the Vietnam Real Estate Association shows that apartment prices have increased in many stages. From 2000 to 2010, apartment prices in Hanoi ranged from 10 to 20 million VND/m2. From 2010 to 2020, apartment prices ranged from 20 to 50 million VND/m2. Since 2020, apartment prices have increased significantly, from 50 to over 100 million VND/m2 depending on the area. With current prices, low- and middle-income people will find it difficult to buy a house without social housing projects.
Mr. Pham Duc Toan – General Director of EZ Vietnam Real Estate Investment and Development JSC said: “To reduce housing prices, I think that in the current context, the State must intervene, through the development of social housing, promoting the construction of large-scale housing areas in large quantities.”
In fact, many incentives in the new regulations have encouraged businesses to proactively apply to change their projects to social housing, even though the profits are not as high as those from commercial housing. However, the procedures for the project still need to be accelerated.
“With a scale of 6 buildings, each with 30 floors, we are contacting relevant agencies to request investment policies and preparing to put into construction at the end of next year,” said Mr. Pham Van Cuong – General Director of Hung Hung Company Limited.
Mr. Bui Tien Thanh – Head of Urban Development Department, Hanoi Department of Construction said: “The longest time is to select the investor, if by bidding it takes nearly 2 years. Recommend the Ministry of Construction with relevant agencies to study and reform administrative procedures”.
The final stages of the social housing project are gradually being completed, and the houses are expected to be handed over to buyers in a few months. However, more than 200 apartments is still a very small number compared to current housing needs.
Ho Chi Minh City promotes investment in social housing construction
In Ho Chi Minh City, according to the latest report from the Department of Construction, from 2021 to now, the city has only had 10 social housing projects, of which 06 projects have been completed, 04 projects are under construction with a total of nearly 6,000 houses. This is a modest result and poses many challenges for the city to achieve the set social housing development targets. In particular, there is a major bottleneck that the city is looking for solutions to remove, which is the construction licensing procedures for this type of housing. This is also one of the important contents emphasized in Official Dispatch No. 130 of the Prime Minister.
The procedures for social housing under the old regulations must go through 4 steps like commercial housing, but social housing is more complicated when it comes with a series of steps such as calculating land use fees , procedures for requesting exemption from land use fees, and procedures for approving subjects eligible to buy social housing . With this process, the completion time must be 3-5 years.
As for the new process, according to the current proposal of the Ho Chi Minh City Department of Construction, an interdisciplinary working group will be established to handle the first step of approving the investment policy at the same time, and eliminate the procedure for calculating land use fees, and the steps for approving buyers will also be simpler. With the new process, it is guaranteed to shorten the time. Recently, the Chairman of the City People’s Committee even committed to reducing the maximum procedure to less than 6 months for social housing for rent.
Recently, to solve difficulties in procedures for investing in social housing, Ho Chi Minh City has established a Working Group to solve procedures for investing in the construction of commercial housing and social housing in the area, and the Department of Construction is the Standing Agency of the Working Group.
One of the tasks of the Working Group is to urge, coordinate and give opinions on the suitability of the conditions for implementing the investment policy approval procedure, the first step of the investment procedure process.
Mr. Pham Dang Ho – Head of Housing Development and Real Estate Market Department, Ho Chi Minh City Department of Construction said: “Previously, we did it in stages and only looked at one step. However, now, when looking at this first step, other departments and branches must also look at the procedural content so that they can support the investor so that after this step, the next steps will not be stuck and will be accelerated.”
To reduce the time for implementing procedures and investment procedures for building social housing projects from more than 1 year to no more than 6 months as committed by the city leaders, there needs to be coordination and cooperation between departments, branches, districts and counties in the process of implementing the documents.
Mr. Le Hoang Chau – Chairman of the Ho Chi Minh City Real Estate Association said: “To implement this determination of the City Chairman, first of all, departments, districts and Thu Duc City must play their roles properly and fully in their responsibility to approve social housing projects.”
Recently, the City Department of Construction also announced a list of 07 social housing projects calling for investment with about 8,000 apartments and will organize bidding to select investors.
Mr. David Jackson – General Director of Avision Young Vietnam said: “Public-private partnership has been proven to be a viable model for developing social housing in many countries. In this partnership, the private sector brings market knowledge and experience, technical capacity and financial resources. Meanwhile, the Government plays the role of “midwife” by creating legal corridors, providing preferential financial and tax policy mechanisms, and creating a favorable environment to encourage investors and accelerate the process of building social housing”.
In addition, currently in Ho Chi Minh City, there are 21 private enterprises registered to invest in building social housing on land funds created by enterprises themselves with about 52,000 apartments.
Thus, with many combined solutions, such as promoting the development of new projects, or the case of requesting to change the purpose of student housing areas in Hanoi that have been abandoned for many years into social housing for rent, the supply of social housing in localities in general in Hanoi and Ho Chi Minh City is gradually improving and accelerating.
In addition, support from the Housing Law 2023 and Decree 100 on management and development of social housing issued by the Government, effective since early August, is also gradually having a spillover effect on localities.
Social housing development in some countries
Globally, social housing projects – with many names such as affordable housing, government-subsidized housing – are also being interested and developed in many countries, helping to solve the needs of low-income people, in a period of many economic challenges as well as inflation.
China is one of the countries that has been implementing many policies to encourage the development of social housing in recent years. The country currently has three main types of social housing, including public rental housing, government-subsidized rental housing and shared ownership housing, targeting different groups of people such as low-income urban families, young people and residents moving to new urban areas. Prices vary by locality, but social housing rental prices are usually 20-50% lower than market prices, while selling prices are also about 10-20% cheaper.
With the commercial real estate sector still frozen, the country is continuously promoting new social housing projects. In the first 6 months of the year, China built more than 1.1 million new social housing units, and the Ministry of Finance also announced an advance of about 7.9 billion USD for new social housing projects next year.
The United States has the world’s most developed commercial real estate market. However, the shortage of housing supply, especially in many large cities, has prompted US authorities to expand support for low-income housing projects.
The Biden administration has announced about $185 million in spending this year to help local governments remove barriers and increase subsidies for new affordable housing projects in the region. Meanwhile, President-elect Donald Trump has pledged to speed up the permitting process for new affordable housing projects on federal land and remove regulatory barriers.