Few businesses go through the procedure of changing the purpose of their investment.
(Baonghean)On June 1st, the 30 trillion VND loan support package under Resolution 02-CP came into effect, but in our province, very few businesses have shown interest in completing the procedures to convert commercial housing into social housing.
At the conference on solutions to overcome difficulties and obstacles for real estate business projects in the province (organized by the Provincial People's Committee on March 27, 2013), many real estate investment enterprises requested the province and relevant agencies to create favorable conditions for converting the function of commercial housing to social housing in order to benefit from preferential policies of the state. This issue was agreed upon and supported by the provincial leadership, who also directed relevant agencies to create conditions for enterprises to consolidate or subdivide land areas to suit market demand, 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).
Reportedly, at the Department of Construction, only three businesses have submitted applications for conversion so far. One project, an investment in the construction of a commercial center, high-rise apartments, townhouses, and villas in Quan Bau ward, Vinh City, requested conversion to social housing. After review and assessment, the Department of Construction sent a document to the Provincial People's Committee, which was subsequently approved.
According to the Head of the Department of Construction: “After the province approves the conversion of the investment purpose from commercial housing to social housing, the investor needs to prepare and submit to the competent authority for approval the adjustment of the detailed construction plan at a scale of 1/500 of the project as prescribed. For the social housing construction item, the project preparation and design must ensure compliance with social housing design standards and must have a business plan in accordance with the law on housing.” With the quick, efficient, and proper procedures of the relevant levels and sectors in approving the conversion of investment purpose, this project will have a good opportunity to quickly access preferential loan capital under Resolution 02-CP.
The housing project, invested by Thanh Nghe Tinh Foodstuff Joint Stock Company, is currently undergoing a conversion of its investment purpose from commercial housing to social housing.
Also part of the project to convert investment purposes from commercial housing to social housing, the housing and commercial complex (at 176 Nguyen Du Street, Vinh City), invested by Thanh Nghe Tinh Foodstuff Joint Stock Company, has completed the entire basement construction, but the investor still decided to convert the investment purpose. The Department of Construction has directly sent a document guiding the investor to complete the full dossier including: Application for adjustment and conversion; Investment purpose conversion plan; Investment objectives and form; Number and percentage of housing units, total floor area of housing; Project implementation progress… As mentioned above, the Provincial People's Committee only accepts projects converting commercial housing to social housing for projects that have not yet raised capital. Therefore, the project invested by Thanh Nghe Tinh Foodstuff Joint Stock Company needs to prepare an explanatory report and provide a written commitment stating that no capital contribution contracts or sales contracts have been signed with customers. If a real estate transaction has already taken place, there must be written consent from all customers who signed the contract regarding the change of the project's purpose.
Mr. Chu Anh Tuan, Head of the Housing and Real Estate Market Management Department of the Department of Construction, said: “Currently, many businesses want to convert their investment purpose from commercial housing to social housing, but they are not yet familiar with the implementation process, leading to incomplete dossiers that require further supplementation of documents according to regulations. Some businesses even apply for conversion upon learning of this policy, but in reality, they do not meet the legal requirements… Therefore, businesses need to thoroughly understand the regulations before submitting their applications. Doing this well will create favorable conditions for both businesses and authorities to review and appraise projects quickly and accurately.” It is known that one of the projects that has not yet been approved for conversion from commercial housing to social housing is DANATOL (the reason being that the area applying for conversion to social housing includes low-rise housing).
It has been learned that one of the reasons businesses are hesitant to apply for conversion of investment purposes from commercial housing to social housing is that the current investment timing is unsuitable, as the real estate market shows no signs of recovery and businesses have difficulty accessing loan capital. According to State Bank officials, although a circular guiding the implementation of Resolution 02-CP has been issued, as of the end of May, the State Bank of Vietnam - Nghe An Branch had not yet received the plan for allocating funds to implement Resolution 02-CP. Furthermore, according to regulations, the support package for implementing Resolution 02-CP allocates 30% of the capital for business loans, making it difficult to invest in social housing…
From June 1st, the 30 trillion VND loan support package under Resolution 02-CP will be disbursed. However, due to delays in completing the necessary paperwork, businesses converting their investment purpose from commercial housing to social housing will find it difficult to access and ensure the timely disbursement of preferential loan funds (6%/year).
Hoang Vinh
