Price caps in social housing: assuring affordable housing

After hearing the proposal and performing a study, the National Assembly debated the determination of selling, renting, and leasing prices for social housing on June 5th, receiving several recommendations from delegates.

According to Minister Ho Duc Phoc, there are two forms of social housing: those financed by the state and those invested by private sector through capital socialization. The proposal explicitly states that if the state invests in social housing, the province People's Committee has the ability to appoint the investor and "determine the selling and rental prices."

Minister Ho Duc Phoc stated that when the state is engaged, it regulates the selling prices for qualified citizens to acquire social housing, emphasizing that once it is considered social housing, the state must authorize the pricing. The draft law does not clarify who authorizes the selling prices for social housing investments made by enterprises.

"When businesses invest capital, but the land is provided free of charge by the state, the state must set a maximum selling price." Only then may social housing be sold or rented to the appropriate demographic. If the maximum selling price is not limit ed, it will slip into the category of commercial housing," the Minister Ho Duc Phoc voiced worry.

The Minister Ho Duc Phoc suggested that laws surrounding social housing infrastructure be included in the legislation; otherwise, future implementation will be extremely difficult. Instead of establishing a charge for each apartment building, the maintenance and administration fees for social housing should be given to the province People's Committee for issue. Previously, communal housing was limit ed to 5 stories and only had staircases; however, elevators and other contemporary equipment are now required, which necessitates a professional management system.

"There must be maintenance funds in order to be professional." And the laborers, as well as the people who live in social housing, should pay for the maintenance. Because these are poor and vulnerable people, prices and fees must be approved rather than allowing investors to raise them as they choose," Mr. Phoc said.

"Based on the determined housing investment needs in the local housing development program and plan, the provincial People's Committee is responsible for reporting to the provincial People's Council on allocating a certain proportion of the funds collected from land use fees and land rental fees of commercial housing investment projects and urban areas within the area to carry out compensation, support, site clearance (if any), and invest in technical infrastructure systems for social housing investment projects or social housing and worker dormitory projects within the area," Minister Ho Duc Phoc stated.

The State Budget Law, according to Minister Ho Duc Phoc, states that budget revenues do not prescribe expenditure duties. It means that the revenues are pooled into the budget without the precise duties being specified. "If it is regulated as proposed, it will be very difficult," Minister Ho Duc Phoc said.

As a result, Mr. Phoc proposed a redesign in which the state is responsible for compensation, assistance, and site clearing in order to offer clean land and develop technological infrastructure for the social housing area. Following that, the selected investor is permitted to create social housing in accordance with the approved plan utilizing the clean land.

Previously, current laws contain explicit and thorough requirements for units to undertake social housing projects, according to the Ministry of Construction. When monitoring the implementation of the Housing Law in 2014, as well as the decrees and circulars governing investment in social housing, certain hurdles emerge that make it difficult for firms and residents to invest in and access social housing.

Although the law provides for exemption of land use fees, VAT reductions, and a 50% decrease in corporate income tax, as well as access to preferential capital, the provisions have not been adequately implemented. The major issue is that, while there exist incentives, they are not incorporated into the selling price when investors use them. As a result, investors do not gain, resulting in a failure to recruit investment.