Social housing developers fazed by 500-day permit approval

Hanoi property developer Hoa Binh only recently received the permits to build a social housing project in the capital’s Hoang Mai District some 17 months after first applying.

Though the land lot earmarked for the project has been fully cleared and is ready for construction, during the review process some government agencies advised the company to build commercial housing instead since it is a prime location.

“I do not understand why there are policies encouraging social housing development but it is so difficult in practice for businesses to start building one,” chairman of the company, Nguyen Huu Duong, said at a meeting Wednesday.

Some other developers had complained earlier that it took them around 600 days to acquire permits for social housing, and wanted the duration reduced to 90-120 days.

Property expert Dang Hung Vo said bureaucracy is the biggest challenge developers face, and the longer administrative procedures take the more loan interest businesses have to pay.

Ha Quang Hung, deputy head of the Ministry of Construction’s department of housing and real estate market management, said authorities need to scrutinize applications carefully to ensure developers do not take advantage of the social housing label.

Changes in housing laws are needed to make social housing more attractive for developers, he added.

A house of cards?

Vietnam plans to build one million social housing units by 2030 and needs VND849 trillion ($36.15 billion) for it, but analysts warn many obstacles need to be overcome to achieve the goal.

They include the criteria set by the government to ensure only low-income people can buy social housing, which are considered outdated and need modification.

Pham Van Thinh, a lawmaker from the northern province of Bac Giang, said one of the conditions is that a buyer must not own any other property, something that few people could meet.

A project in his province with 4,000 apartments has received only 200 applications though sales began over a year ago, he said.

So social housing developers would have a hard time finding buyers and could even fail to sell their apartments, he pointed out.

A VND120-trillion social housing credit package launched on April 1 for developers and buyers with interest rates 1.5-2 percentage points lower than the market has not had a single borrower yet.

Tran Thi Van, a lawmaker from Bac Ninh Province, said similar social housing credit packages have not been utilized in the past either, with some seeing only 1% disbursal.

“This raises the question of whether the latest package will have any impact when changes have yet to be made to property and housing laws.”

An online survey by the government’s Private Sector Development Committee and VnExpress of over 8,300 people in April found that 39% of them were not eligible to buy social housing.

Even workers who own some kind of property in rural areas are not eligible to buy an apartment in the city where they work.

Minister of Construction Nguyen Thanh Nghi promised that government agencies would work together to ease the legal problems and help speed up disbursement of the VND120 trillion package.