No investor of social housing projects gets loans with lower interest rates

 

According to the Law on Housing 2014 about preferential credit policies for investors of social housing projects, special investors are entitled to receive preferential loans from the Bank for Social Policies and credit institutions. If investors build social houses for rent, they can get loans with lower interest rates and longer loan periods than building social houses for lease purchase and sale.

Also according to Decree 100/2015, the Bank for Social Policies is assigned to provide preferential loans to purchase, lease-purchase social housing, building new or renovate or repair houses to live in. Social housing enterprises can ask for loans from Vietcombank, Vietinbank, Agribank, and BIDV. This Decree also stipulates that in the period 2015-2020, the Bank for Social Policies has not yet provided loans to investors of social housing projects.

Meanwhile, the four commercial banks designated to lend to businesses have not yet been refinanced or provided interest rate compensation from the state budget; therefore, up to now, after 7 years of implementation, no social housing investor has asked for loans with preferential interest rates.

Even investors of social housing projects for rent such as Thien Phat Company and Le Thanh Company cannot borrow preferential loans according to the provisions of the Law on Housing, and they have had no choice but to borrow loans at commercial interest rates of about 9 percent-11 percent a year, causing investment costs to increase, the selling price and rental purchase price of social housing increase as well.

At the recent conference to promote the development of social housing for workers and low-income people, the Ministry of Finance confirmed that for a long time now, credit has mainly been given to homebuyers, but has not been loaned to businesses for social housing, although the regime already exists.

According to the Ministry of Construction, in the 2020-2021 period , the supply of real estate decreased sharply whereas responsible agencies have not issued new licenses for projects for social housing. Subsequently, social housing and worker housing projects in 2021 and the first six months of 2022 can’t meet the housing needs of low- and middle-income people and industrial park workers. In addition to difficulties in terms of mechanisms, investors of social housing projects have been facing a shortage of capital.

Not only businesses building social housing, but beneficiaries of social housing policies also borrow small loans with preferential interest rates to buy, and rent-purchase social housing in the period 2015-2020. According to statistics, Ho Chi Minh City has 122,111 civil servants, but so far only more than 5,000 people have been supported with preferential loans of 4.7 percent per year (for 20 years) to buy houses from the HCMC Housing Development Fund.

The preferential loan policy for social housing with an interest rate of 4.8 percent a year according to Decree 100/2015 has not been implemented. Because, the State Bank’s Circular 20/2021 stipulates that individuals and families can only borrow from the Bank for Social Policies to buy or rent-purchase social housing, but must save social housing for 12 months to be eligible for preferential loans. The remaining four commercial banks are only allowed to lend preferential loans to individuals and families with an interest rate of 4.8 percent a month to build houses and repair houses, but not to buy social housing.

In fact, social housing support packages are expanding, but capital resources are still limit ed, so it is still difficult to disburse. Specifically, to recover the economy after the Covid-19 epidemic, the Government and National Assembly have issued a support package of VND 350,000 billion in the period 2022-2023, of which VND 15,000 billion is for social housing development.

However, up to now, according to the Bank for Social Policies' statistics, only 140 billion VND has been disbursed for about 800 customers who are buying and renting social housing.

A State Bank leader said that Decree 31/2022 of the Government has a mechanism to support 2 percent interest rates through commercial banks in 2022-2023, the total interest rate support is 40,000 billion VND from the state budget including loans for renovation of old apartments, build social housing, and houses for workers to rent and buy.

Capital is mobilized by commercial banks to lend, the State Bank operates flexibly and appropriately to create favorable conditions for workers and low-income people to get preferential loans to buy houses. However, businesses said that despite having prime capital, disbursement was still difficult because many businesses did not meet the loan criteria.

From the above fact, real estate businesses in Ho Chi Minh City have petitioned the Standing Committee of the National Assembly to consider and arrange additional compensation for the difference in interest rates for social housing loans for designated commercial banks. Borrowers to buy, rent and buy social housing. The State Bank needs to consider amending Circular 20/2021 guiding preferential loans to implement the social housing policy so that Vietcombank, VietinBank, BIDV, and Agribank are allowed to lend to individuals and families to buy or rent out social housing.

Businesses also proposed the State Bank coordinate with the Ministry of Construction to consider allowing individuals and families who have signed contracts to buy or rent-purchase social housing but have borrowed at commercial interest rates to liquidate credit loan contracts with commercial banks and switch to preferential credit loans with an interest rate of 4.8 percent a year. It also aims to increase the disbursement of a preferential credit package of VND 15,000 billion.