Capital shortage hinders social housing projects

The social housing development program has achieved 30 percent of the goal of the national housing providing strategies because of a capital shortage, said the Ministry of Construction.

Capital shortage hinders social housing projects (Photo: SGGP)

Capital shortage hinders social housing projects (Photo: SGGP)

According to the Ministry, developers are facing difficulties in accessing to loans for building houses for low-incomers and workers in industrial parks and export processing zones; subsequently, pace of housing construction is sluggish.
186 projects including 75,700 apartments have been put into use as the Vietnam Bank for Social Policies just disbursed over VND1.2 trillion, meeting 13 percent of demand for the period 2018-2020. In 2018, the bank has not disbursed while it was asked to disburse VND500 billion ($21,909,748) before. The amount will be provided to low incomers to buy social houses.
A representative from the Ministry of Construction said that the sluggish pace of social housing construction is due to a capital shortage of credit institutions which will give loan to incomers.
The government has stipulated that social house buyers and leaseholders are allowed to ask for loan with preferential interest rate from the Bank for Social Policies, however, in reality, no buyers, tenants and developers are able to access the capital.
As per the statistical figure in localities, 206 social housing projects including 168, 700 apartments are sluggish or halted. Investors of some projects asked to transfer social housing to commercial housing projects. Additionally, local administrations don’t take heed to social housing construction. Plus, investors neglect building houses with small area and cheap price.
To reach the goal of the social housing development plan in 2016-2020 under the national social housing development strategy, by 2020, the country has targeted 12.5 million square meter of social houses.
Lately, the Ministry of Construction has proposed the government to provide additional VND3 trillion to the Vietnam Bank for Social Policies for the goal of social housing projects until 2020 as well as VND3,431 billion for credit institutions to offset loan interest in 2018.
After the preferential loan package of VND30 trillion (US$1.3 billion) for affordable home purchases ended in 2016, property companies in Ho Chi Minh City have asked the Government to solve hiccups along the way of implementation of social housing policies as per the House Law 2014 and the government’s edict No. 100/2015/ND-CP.
Moreover, realty companies petitioned that all social housing policy bracket can enjoy interest rate for loans at 4.8 percent and 130 percent for overdue debt in the bank for social policies or nominated credit institutions.
In its document responding to the petition, the State Bank said that credit institutions have not provided capital for offsetting loan interest for buying social houses. Right after these credit institutions were granted the capital for offsetting loan interest, they will be directed to apply new law for buying social houses as per the government’s decision No. 18/2018.

By PHAN LE – Translated by UYEN PHUONG

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