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|Modern solutions could improve access to financing options for young people, foreigners, entrepreneurs, and others, photo Le Toan|
Vietnam is currently one of the fastest-growing real estate markets, but with house and land prices continuously increasing, supply is limited and homeownership is becoming more difficult.
Brian Letwin, an American who co-founds two leading newspapers for expats, decided with his wife to try and get a property in Dalat and got off to a good start by taking advantage of market information from their relationships. However, when choosing suitable real estate for investment, they faced many difficulties in land valuation and had little knowledge of the transfer process and legal regulations.
Then, Letwin was introduced to Homebase, a technology startup that provides financial solutions to help customers buy real estate in Vietnam.
“The paperwork, legal and other administrative procedures were handled by Homebase. We just need to transfer some money from the US to a Vietnamese account for a deposit, and a few days later the transaction was complete,” said Letwin.
Letwin is one of just a few foreigners currently in Vietnam who have found a way to own real estate in the form of long-term instalment payments while their access to the bank is limited.
This is also deemed suitable for millennials in Vietnam, especially young people who do not have enough capital to buy a house but who do have a stable income.
As Vietnam’s economy has rapidly developed in recent years, home and real estate prices have also inevitably paralleled this growth. At the same time, demand for ownership has risen as supply, especially in Ho Chi Minh City, has diminished.
Traditional financing options are accessible to a limited subset of individuals with stable jobs and high incomes but often are not accessible to a large part of the market, such as young people with low savings, foreigners, entrepreneurs with unstable incomes, or investors buying land or condotels. This means it is more complicated than ever to achieve the dream of homeownership.
Phillip An, co-founder of Homebase, told VIR that his goal is to provide a more flexible and empathetic path towards homeownership, which is typically complex in terms of underdeveloped financial support tools.
“For homebuyers who need an alternative to a bank mortgage, Homebase offers an instalment payment plan to own any type of property; a service that’s available to everyone, regardless of income or nationality,” An said. After customers start to make monthly instalments, they can then choose to either buy the home outright or resell it. If they want to sell, Homebase will do so on the open market.
Homebase makes a point of accompanying customers throughout the home ownership journey, from the initial steps of property valuation and reviewing the red book to carrying out legal procedures, to ensure that the house in which the two parties are investing is completely feasible.
“Prior to purchasing the property, our internal real estate and valuation teams will look into the property’s title to make sure there are no legal issues, and ensure the project is on track for completion if it’s a primary market project under development, among other factors and pitfalls first-time buyers may often face,” said An.
“Ultimately, Homebase’s role is almost similar to being a co-investor in the property, and thus our aligned incentives make sure that we deeply care about the home that is being bought,” he said.