HCM Offers Loan Support for Social Housing Development

Vietstock – Ho Chi Minh City implements synchronized capital incentive policies to develop social housing

At a press conference on the socio‑economic situation of Ho Chi Minh City on the afternoon of July 24, Mr Nguyen Kien Giang – Deputy Head of the Maintenance and Operation Management Department of Transportation Projects, Ho Chi Minh City Department of Construction – explained why the supply of social housing (NOXH) has not met real demand and provided information on capital support solutions to promote development of this type of housing.

According to Mr Giang, one of the biggest bottlenecks lies in compensating for land relocation; many NOXH projects face prolonged difficulties, causing project implementation to be delayed or even not carried out. For commercial housing projects with land use over 10 hectares, although a 20 % land fund for NOXH construction has been identified, project developers are slow to implement land relocation compensation or invest in technical infrastructure construction, so they have not yet begun NOXH construction investment.

Delayed land handovers and construction implementation are also notable causes. Many commercial housing project developers delay handing over the 20 % land fund to the state for NOXH construction investment, or delay implementing NOXH projects on that 20 % land.

Moreover, capital issues remain a major barrier. Long‑term funding to support developers to borrow for NOXH projects, for construction loans, and for beneficiaries of the NOXH policy to borrow for home purchase remains unstable.

“The city has had a loan policy for low‑income groups through the City Housing Development Fund, with a maximum loan of 900 million VND at an attractive interest rate of 4.7 % per annum. However, this loan amount is still low relative to the value of the house, and the borrowing eligibility is limited,” Mr Giang said.

In addition, Mr Giang noted that the investment procedures for NOXH projects have been overly complicated: besides approving investment policy, recognizing the developer, approving detailed planning ratio of 1/500, approving investment, land transfer, land‑use fee calculation, security deposits similar to commercial housing, NOXH projects must carry out price assessment, confirm the buyer, lease‑purchase of NOXH… Therefore, investors have not participated extensively.

Comprehensive support for developing social housing

Regarding the strategy to address capital‑related obstacles to developing social housing in Ho Chi Minh City, Mr Giang said the city has a plan to support both developers and beneficiaries of this program.

For developers, the city fully subsidizes the interest rate for social housing projects financed by the Ho Chi Minh City State Financial Investment Company (HFIC) according to Resolution No. 09/2023/NQ‑HĐND dated 19 September 2023 of the City People’s Council.

The maximum loan amount for the project supported by the budget is 200 billion VND per project (excluding value‑added tax deducted). Of this, construction investment is supported up to 70 %, and technology and equipment investment up to 85 %. The interest‑rate‑support period for the project is no more than 7 years.

In addition, the city supports developers to borrow at lower interest rates by about 1.5‑2 % compared to the average long‑term loan rates of state commercial banks (Agribank, BIDV, Vietcombank, Vietinbank) in the market each period and eligible foreign‑sector commercial banks for specific loan packages (according to the 145 trillion VND credit program for developers and buyers of social housing, workers’ housing, and redevelopment of residential buildings).

For beneficiaries of the social housing support policy, the city has established a policy that allows low‑income individuals to receive preferential loan financing to build a house through the City Housing Development Fund. The maximum loan amount is 70 % of the apartment/house value but not exceeding 900 million VND per application. The maximum loan term is 20 years. The loan interest rate is adjusted each period according to the decision of the City People’s Committee; currently the applied interest rate is 3.2 % per annum.

The city also facilitates buyers to receive preferential loan financing through the City Social Policy Bank. The maximum loan amount is 80 % of the lease‑purchase contract value of social housing. The maximum loan term is 25 years. The loan interest rate equals the rate set for low‑income households by the Prime Minister each period.

Regarding interest rates, buyers receive loans at about 1.5‑2 % lower than the average long‑term loan rates of banks as mentioned in the developer support section.