Is it "difficult" for people to access capital for future housing?

With the new regulations of Circular 26, many people who want to buy a house are worried that they will not be able to borrow money, and their plans to buy a house will be ruined. Economic experts say that the real estate market is unlikely to "explode" at the end of the year.

Many people's plans to buy a house will fail if they cannot access loans. Photo: Chi Cuong

Many people were denied loans.

Circular 26/2015/TT-NHNN of the State Bank guiding the procedures for mortgage and release of mortgages on housing construction investment projects and future housing is causing a stir in public opinion. Many people are worried that buyers of future housing will have difficulty accessing preferential capital sources, as well as capital from commercial banks when buying future housing because the investor has mortgaged to carry out the project before.

Clause 5, Article 3 of Circular 26 stipulates: "In case the investor has mortgaged future housing in a housing construction investment project, when mortgaging that housing construction investment project, only the part of the project that does not include the future housing may be mortgaged."

Clause 6, Article 3 of this Circular also stipulates: “In case of mortgage of property rights related to housing construction investment projects, future housing that is eligible for mortgage under the provisions of law, the housing construction investment project, future housing cannot be mortgaged under the provisions of this Circular”.

“I have chosen a social housing apartment that I like to buy after 15 years of marriage. My husband and I had a hard time completing the procedures to borrow from the 30,000 billion VND package. But when we finished the procedures, the bank staff said that according to Circular 26 of the State Bank, we are no longer eligible for a loan because the real estate project where we booked the apartment was mortgaged by the investor before it was formed. Accordingly, home buyers in this project will no longer be able to put the apartment up for mortgage, unless the investor pays off all the debt on the previous future housing loan to the bank. We do not know how to buy a house if we cannot get a loan,” said Ms. Chu Thi Thanh (Tran Dang Ninh Street, Cau Giay, Hanoi).

Ms. Thanh believes that bad debt management is very necessary. However, the State Bank should have a policy to support people with housing difficulties. Homebuyers should not be refused because the investor has enjoyed the benefits in advance because of course the homebuyer is a "follower". "My husband and I are both workers, earning only about 7 million VND/month, supporting an elderly mother and two children in high school and middle school. Current living conditions are quite cramped, my husband and I and my husband's brother and his wife live on the same 30m2 plot of land with the usable area for two households of 9 people being only 54m2. When we first got married, my mother-in-law understood and slept here today, and slept there tomorrow. Thinking back, I feel very sorry for her," Ms. Thanh confided.

Mr. Pham Van Giang (Ma May Street, Hoan Kiem District, Hanoi) lamented: “Last year, my wife and I had to borrow money to pay for the first installment of our house purchase. At the end of January, the second installment is due, but we have already borrowed from all the places where we could borrow money. When we went to the bank to apply for a loan, the bank staff told us that the investor had used up all of the project's borrowing rights, including the future housing that had been built before. Now we don't know where to get money to pay for the house purchase.”

Mr. Giang said that he had completed all the documents and procedures to borrow the 30,000 billion VND package, but he went to several banks... and was rejected. Bank staff explained that according to the new regulations, they only accept mortgages with other assets, not mortgages with the apartment they were buying because the investor had used this right before.

Still disbursing normally?

Responding to this issue, State Bank Governor Nguyen Van Binh affirmed that the VND30,000 billion credit package is still disbursed normally and home buyers can still borrow when meeting the prescribed conditions. Circular 26 of the State Bank is aimed at managing the arising "bad debt".

Discussing this issue, Lawyer Trinh Thi Hien, Hien Nguyen Law Office (Hanoi) analyzed that in reality, there are a number of real estate projects that are often used by investors as collateral to borrow money from banks. The value of the project before construction begins is mainly the value of land use rights. Some banks lend based on the appraisal of land use rights and future assets formed on the land, but there are also banks that only lend based on the value of land use rights.

When starting construction of the project, the investors advertised for sale the apartments or villas built on that land. The bank lent money to the buyers of the housing project of this project to buy houses and apartments. Thus, a project was mortgaged twice to two different borrowers, the bank considered the use of mortgaged assets like that risky. If the project investor had received a loan from the bank, he/she must pay off all the debt to the bank before the bank would lend to the home buyers. The bank must "hold the handle" because the handling of bad debt is urgent.

Mr. Nghiem Chi My, former Director of the Hanoi Institute for Socio-Economic Analysis, also said that the more cautious the banks are, the more difficulties real estate businesses will face. Investors cannot borrow money, so it is difficult to implement the project, and if the bank does not support apartment buyers when investors have not paid off all their debts, the project will be very difficult to sell. Accordingly, the sale of future products such as houses and apartments will likely be blocked right at the end of this year.

According to Gia dinh.net