Waiting for preferential loans
The government issued Resolution 02-CP (dated January 11, 2003) on several solutions to overcome difficulties in production and business, support the market, and resolve bad debts. In particular, state-owned commercial banks allocated a reasonable amount of capital for low-income individuals, civil servants, public employees, and members of the armed forces to borrow for renting or purchasing social housing and commercial housing at low interest rates, with repayment terms suitable to the customers' capabilities, and for lending to enterprises constructing social housing… However, to this day, people and businesses are still waiting for preferential capital.
(Baonghean)The government issued Resolution 02-CP (dated January 11, 2003) on several solutions to overcome difficulties in production and business, support the market, and resolve bad debts. In particular, state-owned commercial banks allocated a reasonable amount of capital for low-income individuals, civil servants, public employees, and members of the armed forces to borrow for renting or purchasing social housing and commercial housing at low interest rates, with repayment terms suitable to the customers' capabilities, and for lending to enterprises constructing social housing… However, to this day, people and businesses are still waiting for preferential capital.
To facilitate access to preferential capital for real estate investment businesses in accordance with Resolution 02-CP, the Provincial People's Committee has adopted a policy of allowing businesses to consolidate or subdivide land areas to suit market needs without changing the function of the buildings, and to convert commercial high-rise apartment buildings into low-income housing (for projects that have not yet raised capital). To date, many businesses in the province have implemented this land use conversion.
Mr. Nguyen Trong Hung, Deputy General Director of Hanoi Housing Investment and Development Company No. 30, stated: “With the support of the Provincial People's Committee regarding the conversion of commercial high-rise apartment buildings into low-income housing, the company has immediately taken the necessary steps to complete the planning adjustment dossier for the high-rise apartment building project on Le Nin Boulevard and submitted it to the Department of Construction.” Due to the province's requirement that land use conversion only be permitted for projects that have not yet raised capital from customers, Hanoi Housing Investment and Development Company No. 30 is currently only converting one 15-story apartment building. According to the design suitable for social housing, each apartment will be reduced to 45-60 square meters, resulting in approximately 180 apartments (previously 150 apartments).
This project has a total investment capital of approximately 100 billion VND, and in the current difficult real estate market, borrowing capital at commercial interest rates would result in high costs and ultimately losses. Therefore, converting the project from commercial housing to social housing not only allows for preferential loans at 6% interest rates under Resolution 02-CP, but also perfectly suits the needs of a large number of people in Vinh City. However, the current difficulty is that the enterprise has not yet been able to access preferential state funding, so the project has not yet been launched.
The social housing complex in Le Loi ward (Vinh City) is invested in by TECCO Company.
Similarly, the urban development project in Ben Thuy ward, undertaken by Thanh Thai Thinh Co., Ltd., has yet to proceed with the construction of the high-rise apartment building. According to the plan, the project was supposed to include two 21-story apartment buildings. However, due to land clearance issues in the southern area, the Provincial People's Committee has agreed to allow the investor to revise the plan for the southern area to reduce the area due to unresolved land clearance problems. As a result, only one high-rise building will remain in the project.
Mr. Nguyen Hong Sam – Representative of Thanh Thai Thinh Co., Ltd. said: “To meet the current needs of customers, the company is in the process of preparing procedures to adjust the 21-story apartment building down to 11 stories, while also reducing the size of each apartment, and even the penthouses, by hundreds of square meters to 70 square meters, and converting the purpose of use from commercial housing to social housing to facilitate implementation according to Resolution 02-CP. Although the policy has been approved, currently no customers eligible for preferential interest rate loans have registered to buy social housing, which shows that customers have not yet accessed the government's preferential policy.”
With policies supporting low-income individuals, civil servants, public employees, and members of the armed forces to borrow money to rent or buy social housing and commercial housing at low interest rates, this presents a favorable opportunity for businesses interested in the social housing construction sector. For a long time, despite numerous mechanisms and policies to attract and encourage investment in social housing construction, this sector has not developed in our province because businesses cannot access preferential capital. Therefore, businesses have been borrowing at commercial interest rates to invest in social housing construction, inevitably leading to higher prices for social housing and customer hesitation when purchasing high-priced homes labeled as social housing.
In Vinh City, the Vinh branch of TECCO Investment, Construction and Industrial Development Joint Stock Company is currently one of the enterprises boldly investing in the field of social housing construction. Over the past period, the company has invested more than 60 billion VND in building three high-rise buildings to serve social housing needs in Le Loi and Hung Loc wards. According to the company representative, if the banking sector provides loans under Resolution 02-CP, they will continue to invest in building a 7-story social housing building in Hung Loc and other social housing projects in Nghi Kim, Cua Nam, etc.
Regarding the delay in implementing Resolution 02-CP, a representative from the State Bank of Vietnam - Nghe An Branch explained: Currently, the State Bank of Vietnam has not yet received the circular guiding the implementation of Resolution 02-CP on lending to low-income individuals, officials, civil servants, and members of the armed forces to rent or purchase social housing and commercial housing at low interest rates, with repayment terms suitable to the customer's ability to repay, and lending to enterprises constructing social housing. Therefore, the banking sector has not been able to disburse funds, and in the past, state-owned commercial banks and joint-stock commercial banks have been lending for real estate investment at negotiated interest rates.
Since the issuance of Resolution 02-CP (January 11, 2013), five months have passed, and people and businesses are still waiting for funding... for a very long time! The delay in implementing Resolution 02-CP has significantly affected the morale of people and investors, and inevitably slowed down the progress of social housing projects, further "freezing" the real estate market.
Text and photos: Hoang Vinh
