To afford social housing, workers have to work overtime to increase their income, but increasing their income incurs personal income tax. There are some cases where only 70,000 VND tax cannot be bought. In order to promote the housing segment for millions of workers, the seminar “Social housing: More rental solutions” organized by Tuoi Tre …
To afford social housing, workers have to work overtime to increase their income, but increasing their income incurs personal income tax. There are some cases where only 70,000 VND tax cannot be bought.
In order to promote the housing segment for millions of workers, the seminar “Social housing: More rental solutions” organized by Tuoi Tre newspaper in the afternoon of May 18 recorded many remarkable opinions.
Legal removal, increasing the supply of social housing
Speaking, Mr. Tran Dang Toan – General Director of Eastern Company – a member of Kim Oanh Group, repeatedly mentioned the two words “inadequacy”.
Detailing legal problems, Toan said social housing investment procedures are no different from commercial housing projects. Particularly, the procedure for determining financial obligations still has to be carried out even though social housing is exempt from land use fees.
In fact, to carry out the procedure for determining land prices to fulfill financial obligations takes 1-2 years. Another problem, is borrowed capital.
“This is the key for social housing to be rented as well as sold successfully,” Toan said. From a buyer's perspective, this business representative said that it is necessary to ensure that customers can access the appropriate credit package. The interest rate of 4.8% / year, borrowing for 25 years is suitable.
However, according to Mr. Toan, the enterprise project has now completed construction but the policy bank has not yet been disbursed to hand over the house.
For the investor, Mr. Toan said the “luckiest” loan interest rate for businesses is currently 6%. The rest, enterprises still have to access commercial bank credit at a very high level, even more than 10%.
Some other shortcomings were also mentioned by Mr. Toan, which is determining the cost of land prices or social housing buyers.
According to Mr. Toan, the regulation sets an income of no more than 11 million VND/month and each dependent 4.4 million VND/month to maintain from 2020 to now.
“In order to afford social housing, home buyers have to work overtime to increase their income, but increasing their income incurs personal income tax, so they are not eligible to buy a house. There are some cases where only 70,000 VND tax cannot be bought,” Toan said, despite many very difficult circumstances.
The social housing process proposal must be different from commercial housing
Proposing solutions to promote the increase in the supply of social housing in both the sale and rental segments, Mr. Le Huu Nghia – general director of Le Thanh Company – said that the most important thing is to speed up the law.
Why does social housing keep falling short? According to Mr. Nghia, the most important point today is that social housing does not bring the desired corporate profits, even losses.
“This is the root problem. But increasing profits for businesses will increase home selling prices, either. If the legal settlement is fast for the business, time is money. A newly completed 5-year project will cost another year”, Mr. Nghia pointed out.
Mr. Nghia wants the process of building a social housing project to be different from commercial housing. “Not having to remove the procedure, but doing it faster by grafting,” according to Nghia, removing this bottleneck will push up the supply.
Regarding capital, leaders of Le Thanh Company said that if the credit supply is VND 100 billion, it should balance VND 50-50 for investors and buyers. Because if there is no supply, buyers also do not have homes to be disbursed loans.
With the current regulations, even if the revised law takes effect, Mr Nghia still worries that few businesses are interested in investing in social housing projects for rent.
For example, to build 1,000 houses for rent, the construction unit price is 500 million VND/unit, businesses need 500 billion VND. If the rental price is suitable for employees, about 3.5 million VND/month, the revenue for the whole year will not compensate for the interest rate that enterprises have to pay.
“The interest rate could hardly have been cheaper than 10 percent, now we are borrowing 13 percent, even for social housing,” Nghia said. According to him, social housing for rent can only be done by the state, while businesses are very difficult.
Mr. Nghia also proposed to build a social housing market like commercial housing. Currently, after 5 years they are allowed to switch but in fact many people want to sell earlier for different reasons.
The state fears that allowing earlier purchases will lead to speculation, but if a market is built, buyers must also be allowed to buy social housing. Having a market, according to Mr. Nghia, will stimulate the development of this segment.
Mr. Mai Thanh Tung – Deputy Head of Housing Development and Real Estate Market Department, HCMC Department of Construction HCM – also acknowledged HCMC. HCMC has made great efforts to develop social housing, but there are still many obstacles, so the number of completed social housing supply has not met expectations.
According to Mr. Tung, the city will focus on planning, arranging social housing, worker accommodation near export processing zones and industrial zones. The city will review the land fund in industrial parks, advise on adjusting the planning to build worker accommodation houses right in the industrial park land.
