Developing social housing is a well-directed policy to help address the housing needs of citizens, particularly low-income earners. Implementation, however, has exposed various shortcomings, particularly in terms of land allocation and funding.

A report has been prepared by the National Assembly (NA)’s specialized supervision delegation on the implementation of policies and laws regarding the management of the real estate market and the development of social housing from 2015 to the end of 2023. In it, Mr. Vu Hong Thanh, Deputy Head of the supervision delegation, revealed that during this period only 18 of Vietnam’s 63 cities and provinces allocated independent land funds for social housing, while 35 reserved the necessary 20 per cent of land within commercial housing projects for social housing development. The failure to allocate adequate land has been identified as a significant reason for social housing development targets not being met.

Challenges in land allocation

The regulation requiring commercial housing projects in Grade III urban areas or above to allocate 20 per cent of their land for social housing has faced a number of practical obstacles. In many cases, though this land allocation is noted in project approval documents, the specific locations of the plots are not determined. Some projects have yet to complete site clearance and compensation or infrastructure development, while developers of commercial housing projects often delay implementing social housing on the allocated land or fail to transfer the 20 per cent land fund to the State in a timely manner.

Oversight findings further reveal that urban planning documents, housing development plans, and 1:2,000 subdivision plans in several localities do not clearly define areas for social housing development, which has hindered implementation.

Financing for social housing development has also encountered challenges. The social housing loan program launched in 2015 only received State funding in 2018, which was then allocated to the Vietnam Bank for Social Policies for lending. To date, designated credit institutions have not received funds to offset interest rate differences, resulting in low disbursement.

The Vietnam Bank for Social Policies’ lending procedures have added complexities for individuals and businesses seeking loans. Loan applicants are subject to repeated evaluations of their eligibility regarding housing, income, and residency, even after these have been verified by other authorities. This duplication prolongs the loan approval process. The bank also requires applicants to be members of local Savings and Credit Groups, which are organized by community associations such as the Women’s Union or Youth Union. If applicants are not members, they must join and undergo an approval process, further delaying their access to loans. Many eligible applicants, who for various reasons are not part of these community organizations, are denied loans despite qualifying under the law. Another obstacle is the requirement for borrowers to have at least 20 per cent of the housing purchase or rental value in personal savings, which many simply don’t have.

The VND120 trillion ($4.8 billion) credit package for social housing has also faced issues. Many localities report that loan conditions in the package follow the same stringent criteria as for commercial business projects. Developers have also criticized the requirement for provincial People’s Committees to announce eligible social housing projects under the program, as outlined in Resolution No. 33/NQ-CP dated March 11, 2023. They argue that this step is unnecessary, adds a bureaucratic layer, and should be eliminated to streamline the process.

Expanding land funds

The supervision delegation recommended several immediate measures, including advising the NA to allocate sufficient public investment funds to develop social rental housing in urban areas. Adequate State budget allocations are needed to support housing programs for low-income and near-poor households, as well as funding for the Vietnam Bank for Social Policies and designated commercial banks, to speed up disbursements and improve access to social housing.

Additional measures are required to help businesses, homebuyers, and investors access credit under favorable terms and simplified approval procedures. Efforts should be made to overcome obstacles to the effective implementation of the credit package, with a focus on encouraging banks to reduce loan interest rates for social housing projects. The government should also develop appropriate credit programs to support investors and homebuyers with interest rate subsidies from commercial banks.

Minister of Construction Nguyen Thanh Nghi agreed with the aforementioned recommendations, emphasizing that funding is a crucial factor in the development of social housing projects. However, he stressed that cities and provinces must continue to focus on the essential task of formulating, revising, and updating local housing development plans. This includes clearly defining the goals for social housing aimed at low-income residents, industrial workers, and military personnel, and fulfilling the targets set by the Prime Minister to complete social housing projects in 2024 as part of the mega project building 1 million social housing units.

The Ministry of Construction has also instructed local authorities to review and adjust urban and industrial zoning plans to ensure sufficient land is allocated for social housing development. This includes designating 20 per cent of land in commercial housing and urban development projects with existing infrastructure for social housing, ensuring these areas are appropriately located, accessible, and equipped with the necessary technical and social infrastructure.

Alongside proposals to simplify the legal procedures for building social housing and worker housing and renovating old apartment blocks, localities must adopt creative, flexible, and timely approaches based on their specific conditions to facilitate access to the credit package. Developers of approved social housing projects must also expedite the completion of legal procedures and begin construction in line with approved plans and investment approvals.

During the eighth session of the 15th NA, Deputy Prime Minister Tran Hong Ha highlighted that, as stipulated by the Constitution, housing rights should be granted not only to those in special policy groups but to all citizens, including civil servants, workers, employees, and military personnel. As such, conducting investigations and evaluations is essential to address existing issues and shortcomings in a timely manner.

He also said that the government plans to expand and allocate land for the development of social housing, review and convert existing resettlement housing into social housing, and further streamline administrative procedures. The goal is to broaden the pool of beneficiaries, enhance access to social housing, and adopt various measures to keep social housing prices affordable, thereby boosting the overall effectiveness of social housing development moving forward.

On this matter, the Vietnam Association of Real Estate Brokers (VARS) has urged the NA and local People’s Councils to continue monitoring the allocation of land for social housing. It is crucial to have clear reports on which cities and provinces have made such allocations and which have not. Once land is designated for these projects, funding must be provided for site clearance, to ensure a clean land fund and make it easier to attract investors.

Cities and provinces need to prioritize social housing for low and middle-income groups as a vital part of their economic and social development strategies. As such, consistent guidance and oversight on the management of social housing are necessary at the local level. Government agencies must work closely with ministries, sectors, and local authorities to resolve issues and accelerate the implementation of these projects.