Social housing: Supply and demand are mismatched.

(Baonghean) - Vinh City is developing rapidly, and the demand for high-rise apartment buildings is very high. Currently, four social housing projects have been completed and put into use in Vinh City, and two more are underway. However, the demand for social housing for low-income earners and families eligible for social welfare policies is very high, but the supply is not yet sufficient.

Opportunities for low-income earners

With the commissioning of four social housing projects in the wards of Le Loi, Quan Bau, Hung Loc, and Trung Do, 456 apartments have been provided, with a total investment of VND 336.10 billion. Currently, there are two more social housing projects in the communes of Nghi Kim and Nghi Phu that are basically completed and ready for use, with 200 apartments and a total investment of VND 295.50 billion. According to the Department of Construction, in accordance with Resolution No. 317/2010/NQ-HĐND dated July 10, 2010, enterprises that are the investors of social housing projects receive 100% support for the following costs: compensation for land clearance, land leveling, topographic and geological surveys, and the preparation of detailed construction plans. These policies have had a positive impact on businesses, demonstrating the government's support for enterprises in addressing housing policies for low-income earners and resolving difficulties in the province's real estate market.

Housing projects for low-income earners only meet about a quarter of the demand.

The pioneering investor in building social housing in the province is TECCO Joint Stock Company. In 2011 alone, this company invested in and put into use two social housing projects: the Le Loi and Hung Loc apartment complexes, with a total of 186 apartments. Information about Tecco's social housing was eagerly awaited by the public, and all units were quickly reserved. Mr. Nguyen Xuan Quan, Deputy Director of Tecco Nghe An branch, said: For the project, the investor was exempted from land use fees and received support for design fees. The selling price of apartments at that time was 7.4 million VND/m2. The verification of eligibility for purchasing or renting social housing was inspected and approved in writing by the Vinh City People's Committee. The selling and rental prices of social housing were appraised and approved by the competent authority.

Following this, Kim Thi Real Estate Joint Stock Company implemented the CT1 social housing project, a 15-story building with 238 apartments and a total construction floor area of ​​18,777 m2. 80% of the apartments were planned for low-income earners, and 20% for commercial purposes. Currently, the company is continuing with the CT2 social housing project, a 12-story building with 170 apartments and a total floor area of ​​15,174 m2, with a total investment of 147 billion VND. Upon accessing an apartment from Kim Thi Real Estate Joint Stock Company, which meets the criteria for low-income earners, Ms. LA, who works at the Provincial Reproductive Health Care Center, was truly delighted to be able to borrow under the 30,000 billion VND loan package with preferential terms, resolving her family's difficulties. Furthermore, the policy of developing social housing has opened up opportunities for many low-income earners to own homes.

To date, the 30 trillion VND housing loan package has expired, but low-income earners, civil servants, and public employees can still borrow to buy social housing from the Social Policy Bank at a low interest rate of 4.8% per year (0.4% per month) as stipulated in Government Decree 100/2015/ND-CP dated October 20, 2015, on the development and management of social housing. This is an important source of capital for both homebuyers and companies investing in and constructing social housing.

There are still many shortcomings.

However, in reality, the price of apartments has not decreased significantly compared to commercial housing prices, and remains quite high relative to the income of potential homebuyers. The total cost reduction amounts to 4-5% of the total investment, with selling prices ranging from 6.6 to 8.8 million VND/m2 (approximately 5-10% lower than the selling price of commercial housing of the same type). Mr. Nguyen Xuan Quan, Deputy Director of Tecco Nghe An branch, stated that according to Decision 98 of the Provincial People's Committee, investors building social housing are exempt from 10% VAT, corporate income tax, and infrastructure construction investment, and are allowed to include a profit margin of 5-10% in the selling price of the product. If they received such incentives, the product price would decrease, allowing homebuyers to purchase houses at lower prices. However, businesses have not received as many incentives as stipulated, and therefore, the price of social housing has not met expectations.

Therefore, despite the efforts of provincial authorities to create favorable policies and mechanisms for the development of social housing in the locality, the number of businesses investing in this type of housing in Nghe An province remains low, while the demand from the people is still very high. With 6 projects implemented, only less than 700 apartments have been released onto the market, a number far too small compared to the demand of over 3,000 apartments for low-income people.

It has been learned that the demand for social housing in Vinh City and other urban areas is very high, but investment in social housing faces many difficulties because investors are reluctant to invest in this sector due to low profitability. In response to this situation, to encourage and attract investors to social housing projects, the Department of Construction, in coordination with relevant departments and agencies, advised the Provincial People's Committee to propose to the Provincial People's Council the issuance of a Resolution on mechanisms and policies to support and incentivize social housing projects in Nghe An province. The issuance of mechanisms and policies to support and incentivize economic entities to invest in social housing construction, while simultaneously reducing apartment prices and creating conditions for low-income individuals to purchase housing, will contribute to stabilizing their lives.

The low-income housing area - KCC Hung Thinh, Hung Loc (Vinh City) is developed by Tecco.

Furthermore, another issue that needs to be addressed is the ongoing practice of transferring ownership of social housing units. According to the law, developers have the full right to sign contracts after obtaining written approval from the competent authority, thus allowing the sale or exchange of social housing units or giving them to people who do not genuinely need them. “Previously, regulations stipulated that buyers of social housing could only transfer ownership after a minimum of 10 years, but now the regulation has been reduced to 5 years. Therefore, it is not uncommon for one person to live in an apartment while another person is listed as the owner. There is a phenomenon of clandestine transfers, circumventing the law with handwritten documents that are not notarized, waiting until after the stipulated period to complete the transfer procedures,” Mr. Nguyen Xuan Quan added.

Therefore, along with supporting and encouraging investors to develop social housing projects, relevant authorities need to tighten the management of social housing to prevent speculation and profiteering, which could affect the right of low-income people who are genuinely facing housing difficulties to purchase homes.

Thu Huyen