Increase the land use coefficient for social housing projects

Existing Regulations

Specifically, prior to the Housing Law of 2023, Decree No. 100/2015/ND-CP allowed developers to enhance the building density or land usage coefficient by up to 1.5 times the existing construction norms and regulations imposed by the competent authorities. This technique and policy are acceptable and appropriate for ensuring the viability of social housing projects and encouraging more investors to engage in social housing construction.

HoREA states that if the State undertakes a bidding procedure to choose investors for social housing projects where the property or area has a detailed planning of 1/500 approved by the relevant state body, the above rule is not applicable.

This is because the winning bidder is required to carry out the social housing project in accordance with the specific 1/500 detailed planning document, which means that the investor must strictly adhere to the social housing project's construction density and land use coefficient.

Furthermore, in cases where the State conducts a bidding process to select investors for social housing projects on land or areas with sectoral planning of 1/2000, all bidding investors must prepare a detailed planning proposal at a 1/500 scale for the social housing project in their bidding documents, which must meet the conditions and requirements of the bid solicitation and often propose a higher construction density and land use coefficient.

This is due to the fact that the sectoral planning goal indicators at 1/2000 are just average indices of construction density and land use coefficient for the whole sector, which includes both low-rise and high-rise structures.

Currently, competent authorities frequently approve construction standards and regulations for high-rise residential buildings with a construction density of 30-38% and a land use coefficient of around or slightly above 7.0, depending on the construction density, maximum height of the building, and whether it is a luxury, mid-range, or affordable housing project, or a social housing project, as well as the building's maximum height limit  .

The winning bidder is awarded a contract for the investment project with the investor, and the winning bidder then completes the approval process for the 1/500 detailed planning of the social housing project, which must be approved by the competent state authority in accordance with the construction law.

HoREA agreed that, while the state does not yet have a ready land fund for social housing construction, it is critical to encourage investors who either already own land use rights or are negotiating to obtain them to carry out social housing projects. One of the key mechanisms and policies to attract these investors is to allow the developer of a social housing project to increase the construction density or land use coefficient up to a maximum of 1.5 times the current standards and regulations issued by the competent authority in cases where the bidding process selects an investor with land or areas only having sectoral planning at 1/2000, or where the investor already holds land use rights to implement a social housing.

The reason for this is that without such a policy mechanism, investors would prefer to utilize their property for commercial housing projects, which are easier and more efficient, rather than implementing a social housing project, which is subject to several laws.

Guidance in the Decree on Social Housing

HoREA observes that Article 55 of the 2014 Housing Law included rules on the kind and standard area of social housing, which are identical to Article 82 of the 2023 Housing Law. However, at the clause 1 of Article 7 of Decree No. 100/2015/ND-CP, it was stated that developers might increase the building density or land usage coefficient by up to 1.5 times the present rules and regulations set by the competent authorities.

However, paragraph 1 of Article 27 of the draft decree currently lacks a similar provision, making it critical to include this provision in the new point d of paragraph 1 of Article 27 of the draft decree, inheriting the provisions at point an of paragraph 1 of Article 7 of Decree No. 100/2015/ND-CP, which have been proven correct and reasonable in practice.

Citing practical examples, HoREA mentions that Resolution No. 98-NQ/QH15 of the National Assembly on the pilot of some special mechanisms and policies for the development of Ho Chi Minh City specifies that at the time of investment approval, if the detailed planning or sectoral planning does not conform to the general planning, the investment approval may proceed according to the general planning and the targets on land use coefficient or construction density as specified.

In circumstances where the detailed planning does not adhere to the general and sectoral planning, investment approval may continue in accordance with the general and sectoral planning, as well as the housing law's land use coefficient and building density objectives.

Sectoral and detailed planning must be authorized or have their revisions allowed by legal rules prior to creating the Feasibility Study Report for construction investment and moving forward with the project's following phases.

HoREA asserts that this is the legal basis to add the provision allowing developers of social housing projects to increase the construction density or land use coefficient up to a maximum of 1.5 times the current standards and regulations issued by the competent authority in cases where the bidding process selects an investor with land or areas only having sectoral planning at 1/2000, or where the investor already has land use rights to implement a social housing project.