HCMC – Despite its launch a year ago, the VND125-trillion soft loan package for social housing has seen a woefully low disbursement rate, with only VND415 billion allocated to investors and VND540 million to homebuyers.
The Vietnam Chamber of Commerce and Industry (VCCI) and the HCMC Real Estate Association (HoREA) jointly reported that the credit package, facilitated by five commercial banks, does not align well with the needs of potential buyers of social housing.
The State Bank of Vietnam (SBV) has cited limited housing supply as a primary issue. Currently, only 28 provinces and cities have identified social housing and workers’ housing projects for renovation or reconstruction.
While 68 projects have been announced under the program, some encounter legal obstacles, land clearance issues, and land use conversion procedures, impeding banks from extending loans to project investors.
HoREA highlighted the deterrent effect of the high interest rate of 7.5% per year for a five-year term, subject to adjustment every six months and floating after the preferential period, making potential buyers hesitate in borrowing.
To address these challenges, HoREA proposed that the SBV broaden the eligibility criteria for the credit package, extending it to include commercial homebuyers with prices ranging from VND3.5 billion downwards and landlords interested in constructing new or refurbishing workers’ housing.
It also suggested that the Ministry of Construction reconsider the reinstatement of the VND110 trillion credit package proposed in February 2023. This package offers an interest rate of 4.8-5% and a maximum loan term of 25 years, benefiting project investors, homebuyers, or renters of social homes.
Moreover, the draft decree on the development and management of social housing should increase the profit margin to 15%, up from 10%, for self-established land funds.
Furthermore, the association suggested businesses should be allowed to use the social housing project itself as collateral when seeking preferential loans, including those from the VND125 trillion package. Currently, investors must pledge other assets to secure loans.
