Social housing projects halted by capital shortage

People visit an exhibition on social housing in HCM City. - VNA/VNS Photo Thanh Vũ

People with low-incomes are now confronting a crisis as the preferential loan package of VNĐ30 trillion (US$1.3 billion) for affordable home purchases ended in 2016, with no workable alternative currently on offer.

Hoàng Nhật in Tân Bình District, HCM City, had to get a commercial loan with interest of 8 per cent per year when he bought a social house in Bình Tân District. The bank will cover 2 per cent of the interest for the first two years, but rates could rise after that. Nhật told the Tuổi trẻ (Youth) newspaper that he was afraid that the loan interest would rise unpredictably and beyond his ability to repay it.

Meanwhile, Nguyễn Thị Lan in Bình Thạnh District is still waiting for a preferential loan as she needs about VNĐ500 million ($22,000) to purchase a house.

“I would rather wait than take a commercial loan because its interest rate may rise too high,” she said.

Trương Anh Tuấn, chairman of Hoàng Quân Cooperation, said that the lack of preferential loan packages for social home purchases halted their 22 projects of constructing affordable homes. To raise market demand, enterprises have to offer clients interest rate subsidies.

“We are longing for the preferential loan programme. Without it, low-income people struggle to buy social homes,” Tuấn said.

A representative of Nam Long Investment Holding Company said that in 2018, only VNĐ500 billion ($22 million) was funded for VBSP to support affordable home purchasers with low interest rates. Meanwhile, enterprises cannot enjoy the capital.

Đào Anh Tuấn, head of the Student Credit Department under VBSP, said that the Governmental decree issued in 2015 assigned the bank to implement the social housing policy. However, as of 2017, there had been no capital allocated. Capital of VNĐ500 billion funded by the State Bank of Việt Nam (SBV) this year is expected to be lended at the interest rate of 4.8 per cent a year, according to Tuấn.

Borrowers include those who have contributed to the revolutionary cause, poor and near-poor households, low-income workers and State employees.

“The capital is the biggest obstruction as VNĐ500 billion will be distributed to 63 localities. The number of people who can approach the loan will be limited,” he added.

On the other hand, Nguyễn Quốc Hùng, head of the Department of Credit under SBV, said that only VNĐ500 billion out of the preferential loan package of VNĐ2 trillion would be disbursed in the near future. The rest will be gradually paid out by 2020.

According to him, the previous package of VNĐ30 trillion has received VNĐ7 trillion ($307 million) of repayment so far.

Nguyễn Trọng Ninh, head of the Department of Housing and Realty Market Management under the Ministry of Construction, suggested that the SBV fund commercial banks with the preferential capital for social housing as enterprises cannot access loans offered by SBV.

“The only way to help enterprises address financial difficulties is to provide an interest subsidy on loans provided by credit institutions,” he said.