Social housing program collapses.
The 30 trillion VND credit support package helped thousands of low-income people acquire a place to live. However, the suspension of disbursements from this package on June 1, 2016, has forced many homebuyers to consider giving up their dream of owning a home because they cannot afford to repay the loan at commercial interest rates.
Many businesses specialize in construction.social housingSocial housing (NHS) also lamented falling into a severe capital shortage due to lack of access to preferential credit sources.
Stuck in a rut due to lack of capital.
Nearly 100 customers who purchased social housing at 35 Ho Hoc Lam Street, Binh Tan District (Ho Chi Minh City) are facing a dilemma as the project's investor, Hoang Quan Real Estate Company, lacks capital, leaving the handover date uncertain. Meanwhile, many residents are drowning in debt, having to sell off their homes and other assets to pay monthly interest on their social housing loans.
Responding to the delay, Hoang Quan Real Estate Company stated that the company has a total registered capital of 5,000 billion VND. However, due to simultaneously implementing 24 social housing projects, plus the suspension of the 30,000 billion VND social housing loan support package, the company is facing a severe capital shortage. The company has been using its own capital to cover expenses, share interest rates with buyers, and accept a significant reduction and limitation of profits from social housing business.
|
| For social housing programs to be effective, they need a stable source of funding. |
Facing a funding crisis, the developer has no choice but to appeal to customers for loans to cover the remaining capital needed to expedite progress. Alternatively, they may request the Ho Chi Minh City People's Committee to allow the use of funds from the Housing Development Fund for social housing construction. Even worse, if these solutions fail, the developer is considering the final option of returning the project to the State.
Similarly, recently, more than 700 customers who purchased social housing at the AZ Thăng Long Social Housing and Commercial Service Complex Project (commercial name: Bright City) in Kim Chung commune (Hoai Duc district, Hanoi) have sent a petition to the Government and the Ministry of Construction, complaining about the project's delayed handover of houses, which has left them in a difficult situation.
Explaining the reason for the project's delay, the investor, Thang Long Confectionery Co., Ltd., stated that the AZ Thang Long project was progressing according to schedule when it encountered a major force majeure event related to policy: the suspension of the 30,000 billion VND loan package nationwide.
According to the developer, due to the lack of preferential interest rates, customers are no longer interested in the project, while the developer faces difficulties borrowing investment capital from banks at high commercial interest rates. After the 30,000 billion VND package was discontinued, more than 1.5 years have passed since the Government and the State Bank of Vietnam issued numerous guidelines for a new preferential loan package for social housing at the Vietnam Bank for Social Policies (VBSP), but to date, the funds are unavailable, and everyone is waiting.
The financial support is like a drop in the ocean.
According to compiled data from the Ministry of Construction, the nationwide demand for social housing from 2011 to 2020 was approximately 440,000 apartments. However, according to the implementation results of localities, only about 28% of the plan has been achieved so far. In Ho Chi Minh City alone, according to the social housing development plan of the Department of Construction, from 2017 to 2020, the city will develop 39 projects with a scale of 45,000 apartments.
Meanwhile, calculations show that the demand for social housing in the city will reach 81,000 units by 2020. These statistics reveal a significant gap between supply and demand for social housing in the country's most populous city. Despite the high demand for social housing, the ability of businesses to meet it remains very limited. To date, statistics show that social housing is still largely absent from the Ho Chi Minh City real estate market.
The main reason for the slow progress and numerous difficulties and obstacles in the development of social housing is the lack of allocated budget funds to implement social housing support policies as stipulated. According to information from the Vietnam Bank for Social Policies (VBSP), lending for social housing purchases officially began last April.
Accordingly, in 2018, the Government allocated 500 billion VND to the Vietnam Bank for Social Policies (VBSP), and the bank mobilized an additional 500 billion VND. Thus, this year the bank will have a disbursement fund of 1,000 billion VND. However, in a document sent to the Prime Minister, the Ministry of Construction stated that, to date, the funds have not yet been disbursed. Furthermore, even if disbursed, this money would only be used for loans to households and individuals; project investors would not be eligible for this funding.
Meanwhile, reports from localities indicate that currently there are 206 social housing projects with a construction scale of approximately 168,700 apartments, totaling about 8,435,000 m2, that are behind schedule or temporarily suspended due to a lack of funding to continue implementation.
Even accessing this loan capital is not easy for the people. According to calculations, the 1,000 billion VND capital from the Vietnam Bank for Social Policies will be allocated to localities for lending. Of this, Hanoi and Ho Chi Minh City will receive the largest allocation, 50 billion VND each.
Other cities are allocated around 10 billion VND or less, depending on local conditions. In large cities like Hanoi or Ho Chi Minh City, the allocation of 50 billion VND, calculated as the average loan amount for social housing, means only about 150 people can access this preferential loan. This is like a drop in the ocean.
According to economist Dr. Truong Huy Mai (RMIT), the estimated capital requirement for social housing is over 5,000 billion VND. Therefore, the State needs additional funding, as 1,000-2,000 billion VND is far too little to meet the needs. To secure funding for social housing development, a more fundamental solution is needed, instead of relying solely on government support packages.
For its part, the State needs to take the lead in organizing the implementation; simply calling for and soliciting capital from outside the community will be difficult. The demand for social housing is always high, so even without preferential capital from the State, businesses investing in this segment will still not be unprofitable.
However, because homebuyers cannot access low-interest loans and have to borrow commercially at double the interest rate with many other stringent conditions, their access to housing decreases. In that case, businesses have to subsidize interest rates for homebuyers for a certain period, thus severely limiting their profit margins. This is a significant barrier, analyzed Dr. Truong Huy Mai.
