Only 1.7% of HCMC applicants get social housing loans

Nguyen Duc Lenh, deputy director of the State Bank of Vietnam’s Ho Chi Minh City Branch, said that since 2018 his bank has been allocated capital to implement a social housing loan program that offers low interest rates of 4.8% per annum for 25 years to civil servants, public employees and low-income people who want to buy, build or repair houses.

After five years, the branch has lent VND150 billion ($6.3 million) to 310 people.

Huynh Thanh Khiet, deputy director of the Ho Chi Minh City Department of Construction said Friday at a conference reviewing housing development over the 2016-2020 period that many people want to get loans, but do not meet all conditions, Khiet said.

One unreachable requirement for many loan seekers aiming to build or repair a house is ensuring they can provide 30% of the loan with their own capital, he said.

A social housing unit costs VND0.7-1 billion, of which banks lend 70-80% of the total cost, and the remaining 20-30% is paid by borrowers. The remainder is still a very large sum of money for low-income earners.

Khiet added that many workers also don’t have the land-use right certificates and proof of permanent residence documentation needed to obtain a loan.

In addition, the maximum loan for building or repairing houses is only VND500 million (nearly US$21,200), and borrowers have to mortgage land-use right certificates. Meanwhile, if people mortgage land-use right certificates at commercial banks, they can receive far larger loans.

The dearth in housing supply is another major barrier because banks can only lend when social housing development projects have taken shape.

Of the 53.7 million square meters of floor area constructed in the city in the 2016-2020 period, only 2% was social housing. Another 26% was commercial houses, and 72% was self-built houses.

From now to 2025, the city aims to add 2.5 million more square meters of social housing floor area. The goal will be difficult to achieve if problems related to social housing are not solved, Khiet said.

Lenh proposed that the Government consider doubling the maximum loan amount for construction or renovation or repair of residential houses from VND500 million to VND1 billion.

Due to the higher cost of construction materials and labor, VND500 million is not enough to build a new house in the city, he said.