People have few opportunities to access preferential capital to buy social housing.

Maximum loan term for social housing purchase is 25 years

The 30,000 billion VND preferential credit package for low-interest social housing projects ended in 2016, but many poor and low-income people have not been able to access loans. The disbursement of the credit package for people to borrow to buy social housing is good news for low-income people.

The Government has allocated VND500 billion in capital to the Vietnam Bank for Social Policies (VBSP) to implement a program of lending for purchasing, leasing, and repairing social housing. VBSP itself mobilized VND500 billion, bringing the total lending capital in 2018 to VND1,000 billion.

Mr. Tran Hai Hoa, a civil servant renting a house in Dong Da (Hanoi) said: "I have been waiting for this preferential capital source to be deployed all this year, preparing a plan to collect money, and consulting social housing projects. If I can borrow preferential capital, my family will have enough financial capacity to buy a house, otherwise I will definitely continue to rent."

Maximum loan term for social housing purchase is 25 years.

According to the report of the Ministry of Construction, the demand for social housing nationwide in the period 2011 - 2020 requires about 440,000 apartments. Correspondingly, there are hundreds of thousands of households, mainly young families, low-income households, and poor people who are in urgent need of housing. Currently, the whole country is implementing 195 projects with a scale of about 165,000 social housing apartments. Of which, in Hanoi, it is expected that there will be an additional 430,000m²Social housing; Ho Chi Minh City implements 39 projects with 43,700 apartments.

The supply of social housing and low-cost commercial apartments is also not small, and the demand of the people is also large. However, "supply and demand" have not met because during the past 2 years, the source of loans with preferential interest rates has not been disbursed.

Too few people have access to preferential loans.

According to the Social Policy Bank, 1,000 billion VND of capital has been allocated to localities for lending. Of which, Hanoi and Ho Chi Minh City are allocated the largest capital of 50 billion VND each. Other cities such as Hai Phong, Thanh Hoa, Nghe An... are allocated about 10 billion VND or less depending on the conditions of each locality.

The loan capital allocated to the provinces is based on surveys and loan plans at the grassroots level approved by the People's Committees of provinces and cities. However, the total loan demand of the provinces and cities is 5,000 billion VND. While there is only 1,000 billion VND available for lending, the current loan capital is very little compared to the demand.

Few people can access preferential loans to buy social housing.

Mr. Hoang Lien Son, Deputy Director of the Hanoi branch of the Vietnam Bank for Social Policies, said: This source of capital is only for people who are eligible for loans according to regulations, not for lending to businesses building social housing. The state budget cannot meet 100% of people's loan needs. In the current budget conditions, the source of loans is still limited, while people's loan needs to buy social housing are very large.

“The Hanoi Social Policy Bank has been allocated 50 billion VND, on average, only about 150 people can access this preferential loan source. This is a small number compared to thousands of households that are eligible for loans and are in need of preferential loans in the capital,” said Mr. Hoang Lien Son.

According to Mr. Nguyen Tran Nam, Chairman of the Vietnam Real Estate Association, to increase capital sources and low-income people have more opportunities to access capital sources with low interest rates of 4.8%, there needs to be a policy to support loan interest rates to mobilize capital sources from commercial banks. This also stimulates demand for the development of the low-cost housing and social housing segment. It is possible to use the form of interest rate compensation for loans at some banks of about 3% for those who buy social housing and low-cost commercial housing with house prices below 1.05 billion VND/unit.

“If the interest rate of loans from commercial banks is compensated by 3%, it will create a cash flow of about 20,000 billion VND to pour into social housing and low-cost commercial housing. This will create a huge capital flow for this market, creating more opportunities for the poor and low-income people to borrow capital at low interest rates,” said Mr. Nguyen Tran Nam./.

Regarding the loan recipients include:

a. People with revolutionary contributions

b. Low-income people, poor and near-poor households in urban areas

c. Workers working at enterprises inside and outside industrial parks

d. Officers, professional non-commissioned officers, professional officers, professional soldiers, workers in agencies of the people's police and people's army

d. Cadres, civil servants and public employees according to the provisions of law on cadres, civil servants and public employees

(Subjects b, c, d, and e must not be required to pay regular income tax according to regulations).

+ When borrowing capital from the Social Policy Bank, the borrower must meet 7 conditions to be eligible for the loan. In particular, according to Decree 100 and the guidance of the Social Policy Bank, the borrower must make a savings deposit with a minimum deposit period of 12 months, from the date of signing the Credit Contract with the Social Policy Bank. The minimum monthly deposit is equal to the monthly repayment of the borrower.

+ In addition, the borrower must have sufficient equity capital of at least 20% of the value of the Sale Contract or the Social Housing Lease-Purchase Contract for loans to buy/lease-purchase social housing; the Social Policy Bank lends a maximum of 80%. In addition, the borrower must meet other conditions regarding documents proving the subject, income, house purchase contract, etc.