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Ministry plans incentives for low income housing projects   2009-03-03 - TN

 
 
Children play in the courtyard of the Ward 3 Apartments, a low income housing project in District 4  
The construction ministry has prepared streamlined licensing procedures and lower taxes to encourage investment in affordable housing, officials said at a seminar Saturday.

 

Deputy Minister of Construction Nguyen Tran Nam said the increasingly high demand of low income housing had become a “headache” as the government lacks both the capital and human resources to ease it.

The newly proposed policies, which would be submitted to the prime minister for consideration at a later date, could exempt developers from land use tax, value added tax and even corporate tax if they build housing for low-income people, Nam said.

“Regulations will be amended so that the paperwork for affordable housing projects will be simplified,” Nam said.

The low income housing market has been largely ignored by private developers who for the past few years have focused on up-market housing projects.

Meanwhile, about a third of nearly 2 million state workers and 90 percent of about 1 million workers at industrial zones nationwide are facing housing difficulties, according to the Vietnam General Confederation of Labor.

Nguyen Trong Ninh, deputy head of House and Real Estate Market Management at the construction ministry, said 30 percent of Vietnamese families live in homes of less than 36 square meters while 19 percent live in poorly constructed homes.

However, with the up-market housing market in near-hibernation since mid 2008 due to tightened monetary policy, Chairman of the Ho Chi Minh City Real Estate Association Le Hoang Chau said several developers and real estate companies had “woken up” and shifted their priority to moderately-priced homes.

Dat Lanh Company was the first company to develop low-middle income homes after the freeze with its small-area home project that sold houses for between VND600 million and VND700 million (US$34,000- 36,000) each.

Nam Long Company’s Ehome project is offering 50- to 60-squaremeter apartments at VND500-600 million each, Chau said.

Many investors are also interested in properties for sale at less than VND500 million, said Tran Kim Chung, an analyst at the Ministry of Planning and Investment’s Strategic Research Institute.

Deputy Minister Nam said he hoped the rise of this market segment would warm the entire real estate market.

Yet many investors and developers pushed for stronger support from the government, complaining of small profits and long periods of waiting to recover investment capital.

Do Thi Loan, secretary general of the Ho Chi Minh City Real Estate Organization, said the shortage of capital and complicated, at times cumbersome, paperwork and regulations have deterred many developers from joining the low income housing market.

Nam said in January that public housing investors had to go through a 33-step administrative process to register projects.

Nguyen Van Duc, deputy director of Dat Lanh Company, said it took his company up to 30 months to complete the paperwork for a project of 700 low-middle income homes in HCMC’s District 12.

The Housing Law says low income housing blocks in Hanoi and Ho Chi Minh City may not be more than six stories tall and that each unit must be 30-60 square meters.

Nguyen Gia Thieu, a real estate developer, said homes of less than 30 square meters could be made available to more low income earners.

On the other hand, Chau from the association said 60-square-meter homes were not large enough for big families.

“Let’s leave the job of setting up construction scale regulations to authorities in each locality,” Chau suggested.

Tran Minh Hoang, chairman of Vinaland Invest, said Vietnam should have a fund for public housing development.

Nam said the construction ministry has proposed such a fund, to be sponsored by the government, foreign donors and other financial institutions.

According to the proposal, workers may also contribute up to 5 percent of their wages to the fund. The money would be refunded to workers who do not want to buy housing under the fund, he said.



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