At a recent seminar in Hanoi entitled “Developing Social Housing in the Context of New Policies”, Mr. Ha Quang Hung, Deputy Director of the Housing and Real Estate Market Management Agency at the Ministry of Construction (MoC), said the legal framework for the real estate market is now considered comprehensive. Specifically, the government issued Decree No. 100/2024/ND-CP on July 26, 2024, which outlines detailed provisions of the Law on Housing 2023 (amended) on social housing development and management, including a dedicated chapter on procedural steps. These steps provide clear guidance on the investment process for social housing projects, from policy proposals and zoning approvals to investor selection and project completion.

“This is the first time we have established such detailed procedural guidance,” Mr. Hung told the seminar. “Clear regulations help address inconsistencies in how different localities implement these projects.”

Clear procedural guidelines

Decree No. 100, he continued, also mandates that provincial People’s Committees allocate sufficient land for social housing during urban planning, based on local needs. For example, if a province requires 200 ha of land, the Committee is to designate specific areas in the urban plan to meet that need.

Additionally, the Decree continues to provide guidelines on the responsibility of commercial housing project investors to allocate land for social housing development. Specifically, while the Law on Housing 2014 required investors of commercial housing projects, regardless of scale, to set aside land for social housing, the new regulation does not consider project size but is based on the needs and conditions of the locality.

Similarly, regarding documentation proving eligibility for social housing policies, Mr. Hung noted that the Law on Housing 2014 required meeting three criteria: housing, income, and residency. However, under the new regulation, those purchasing or renting-to-own only need to meet the housing and income criteria, while those renting only need to belong to a household or individual group as defined in the Law on Housing 2023 (amended). This simplifies the eligibility process, making it easier and quicker for people to provide proof.

Notably, Mr. Hung added, Decree No. 100 also stipulates that in cases where social housing projects undergo a bidding process to select investors, if the bidding includes price-related criteria, the investor will not be required to complete a price appraisal process afterwards.

Assessing efforts to resolve challenges relating to social housing, Professor Hoang Van Cuong, Member of the National Assembly (NA)’s Finance and Budget Committee and Deputy Chairman of the Vietnam Economic Association, noted that some regulations that were previously rigid have now become much more flexible. As a result, new resources, conditions, and opportunities for development will emerge, allowing both social housing project investors and purchasers to access policies more quickly.

From a business perspective, Mr. Truong Anh Tuan, Chairman of property developer the Hoang Quan Group, shared his experience from ten years of working on social housing and worker housing projects. As one of ten companies committed to the 1 million social housing units program by 2030, he said that never before has there been such clear support from the Politburo, the Party Central Committee Secretariat, the NA, the government, ministries, departments, provincial People’s Committees, and even the public for social housing policies.

“I believe that the Law on Housing 2023 (amended) and Decree No. 100 have truly removed many barriers related to legal procedures, land policy mechanisms, administrative procedures, funding, and customer eligibility,” he emphasized. “The new legal framework is expected to create momentum and serve as the essential element for fulfilling the 1 million social housing units program.”

Currently, costs related to compensation, sales, and management for social housing businesses are clearly defined and similar to those for commercial housing projects. Additionally, the pricing formula is more closely aligned with market realities, giving social housing businesses a better chance of achieving the 10 per cent profit margin that had previously seemed nearly impossible.

More comprehensive policies required

Though existing policies have resolved many previous issues, lawyer Truong Anh Tuan, Deputy Secretary General and Head of the Legal Department at the Vietnam Real Estate Association (VNREA), believes they still fall short of fully meeting business needs.

Mr. Tuan from the Hoang Quan Group highlighted that while localities have generally allocated land for social housing, much of this land is situated in inconvenient, remote areas, making it unattractive for businesses to develop or for people to live there. As a solution, businesses propose repurposing land zoned for residential housing to accommodate social housing. In such cases, companies should be allowed to include compensation and site clearance costs in the selling price to help boost the supply of social housing.

Additionally, while recent regulations provide some support for businesses developing rental social housing, more substantial policies are needed from the government and the NA, particularly regarding capital access. Many companies, including Hoang Quan, currently rely on raising funds through the stock market.

Despite a more open regulatory framework, making it easier for beneficiaries to access social housing, challenges persist during implementation. Mr. Tuan pointed out that in a specific project of Hoang Quan in one locality, when loans for social housing were administered through local credit branches, loan officers were often overly cautious, fearing audits and inspections, which resulted in excessive paperwork requirements and made it difficult for customers to access these loans.

Given such challenges, Lawyer Tuan emphasized that while the current interest rates for social housing are reasonable, the State Bank of Vietnam and commercial banks should provide training and support for their branches to identify and address the bottlenecks preventing funds from reaching the intended beneficiaries. This would facilitate better access to capital for both businesses and those in need of social housing.

In terms of credit availability for social housing development, Mr. Le Van Tuan, Deputy Head of the Credit Policy Department at the Vietnam Bank for Agriculture and Rural Development (Agribank), said that when the VND120 trillion ($4.88 billion) credit package for social housing development was introduced, the bank promptly implemented it across its entire system. By early 2024, it had prioritized funding for social housing, approving 13 projects as of August this year with a total value of over VND3 trillion ($122 million). Additionally, five more projects are slated for loans totaling VND1.5 trillion ($61 million), with another 12 under review, totaling VND5.2 trillion ($212 million). Total projected funding for 2024-2025 stands at approximately VND10 trillion ($407 million).

Agribank plans to continue prioritizing financing for social housing, worker housing, and the renovation of old apartment buildings, with a long-term focus extending to 2030. The bank has also instructed its branches to coordinate closely with provincial Departments of Construction and local authorities to identify the needs of social housing projects and promptly resolve any legal challenges. Furthermore, cost-cutting measures are being introduced to reduce loan interest rates for social housing.

The MoC has acknowledged that there is often a gap between policy and implementation. To ensure that new regulations are applied effectively on a large scale, it plans to provide detailed guidance to localities, urging them to swiftly issue the necessary legal documents. Training workshops will be held to ensure that specialized agencies and officials fully understand the new regulations while listening to concerns from those directly impacted by these policies.

Moreover, administrative procedures should be publicly posted on the government’s public service portal, local electronic portals, and at administrative offices, as mandated by law, ensuring that citizens and businesses are both informed and able to monitor the process.