Ho Chi Minh City: Creating motivation for social housing development

Ho Chi Minh City will prioritize land fund for social housing development. Picture: Nguyen Hue.

Creating motivation

According to the Ho Chi Minh City Real Estate Association (HOREA), over time to address the demand for housing for low-income people, HCMC has implemented many solutions. In that for finance, while the State has not had a general policy on credit support for the first home buyers, since 2006 HCM has implemented a preferential credit policy for cadres, workers and employees when buying the first house. In the first phase, the city supported each house loan rate with 300 million VND, then, increased to 400 million. In recent years it is 500 million VND. Currently, the Housing Development Fund and the Department of Finance are proposing the City People's Committee to raise the lending rate to 600 million VND. After 12 years of implementation, 4,010 staff and workers borrowed a total amount of 1.565 billion VND.

Mr. Le Hoang Chau, President of HOREA, said the urban upgrading and development program includes the construction and upgrading of old condominiums; relocation and resettlement of houses and canals; housing development, workers accommodation, and student dormitories are considered a dynamic program of Ho Chi Minh City to create conditions for the socialization and mobilization of resources for enterprises to actively participate in constructing, renovating and developing the HCMC urban area. In particular, there is a goal of developing social security, housing for resettlement, cheap commercial housing for sale, long-term installment sale, and low-income rent. In fact, from 2000 to now, many enterprises in Ho Chi Minh City have invested in the development of affordable housing projects, including pioneering enterprises investing in homes with non-state budget funds in the suburban districts. Typical is the Le Thanh Company, which has invested in 4,500 apartments. This is also the first private company to invest in commercial projects with an area of 29m2/ unit with a 49 years long lease. Currently, this company is implementing 930 apartments for long term lease with 38m2/ apartments in Binh Tan district. Saigon Real Estate Company (Resco) has invested in the first worker housing complex of the city in Linh Trung Export Processing Zone. Hoang Quan Company has completed and used 1,700 social welfare facilities in An Phu Tay Commune, Binh Chanh District, and is continuing to invest in 4 other projects. Nam Long Company has implemented 8 low cost housing projects and is investing in social security projects in District 9 and Binh Chanh.

In the area of resettlement housing, low-cost commercial houses also have many companies involved such as Duc Khai Company; Nam Rach Chiec; Thu Duc Housing Development Company; Hung Thinh, An Gia, Hoang Anh Gia Lai, Vietcomreal, Hung Ngan, Tecco, Dat Lanh... have invested in developing many affordable housing projects, small apartment projects to meet the needs of low income people.

Many solutions

According to the HCMC Department of Construction's development plan, from now to 2020, the city will develop 39 projects with 45,000 apartments. It is expected that by 2020, 30,000 units will be completed and put into operation, of which 20% will be for lease, 60% will be for long-term sale, and 20% will be for commercial investors to offset costs.

Mr. Tran Trong Tuan, Director of the HCM City Department of Construction, said that the unit has developed a coordination process with the Ministry of Construction, departments and districts under the one-stop window mechanism to reduce the time to do three administrative procedures of the housing project: appraisal of basic design, technical design evaluation, and construction permit.

In addition, according to Mr. Tran Trong Tuan, in the draft program of housing development in HCMC period 2016-2025, which was approved by the People's Committee of Ho Chi Minh City, it also proposed more solutions for the development of low commercial housing prices, and social housing projects to meet the huge demand for housing for low-income people. It will pilot mechanisms to allow low-cost commercial housing projects and rental housing to pay annual land use levies, thus reducing the financial pressure on investors. To prioritize the preferential loan sources, consider and supplement the objects of the projects of low-price commercial houses and rented houses, which are entitled to borrow capital to support the demand of the city; To continue diversifying investment forms for non-state budget construction; To review the allocation of 20% of land fund for commercial housing projects on 10ha to promote the construction investment of the social fund.

In cases where investors fail to deploy or delay implementation, they shall be handed over to capable investors to avoid wasting land funds. To prioritize the budget allocation and create land fund in clean suburban areas along public transport routes to implement social security projects; To broaden the loan support policy for households and individuals investing in building, repairing and renovating guest houses for workers.

Besides financial and land solutions, Mr. Tuan said that HCM City will continue to reform its administrative procedures in investment in building houses in the direction of simplification, ease of implementation and shortening of time related to the approval of the policy permitting the investment, design evaluation, land allocation and licensing; Promote the reform of loan application procedures.