Việt Nam should raise policies to encourage the development of affordable rental housing in an effort to resolve the severe shortage of housing for low-income earners, experts said.

Việt Nam should raise policies to encourage development of affordable rental housing

Affordable rental housing projects, in fact, could be counted on the fingers of one hand, and could meet only a modest part of the demand. Applications for renting these apartments always outnumbered the available rental apartments.

Trần Hùng, who wanted to rent an apartment at Hà Nội Housing Development Investment Company No 5’s social project in Đại Kim Urban Area, was worried that he had limited opportunities as there were hundreds of applications but only 136 out of 630 apartments available on rent.

Vũ Thị Lan Anh, deputy general director of CEO Group, was quoted by Kinh Tế Đô Thị online newspaper as saying that only 86 apartments of the group’s Bamboo Garden social housing project were to be leased out at the intended price of VNĐ48,000 per square metre per month. But the number of applications for renting homes was several times higher.

According to Nguyễn Trần Nam, chairman of the Việt Nam Real Estate Association, this proved that there was a thirst for affordable rental apartments. However, due to the slow capital recovery and lack of incentives few developers were showing an interest, Nam said.

Property expert Đặng Hùng Võ said that affordable rental housing development had become critical for Việt Nam as many low-income earners could not afford a house even with preferential loans and many were not eligible for banking loans. Policies should be raised to encourage developers, he added.

According to the Việt Nam Federation of Civil Engineering Associations, in developed countries, rented homes often accounted for more than 40 per cent. In Việt Nam, people generally preferred to own a home rather than live on rent.

Economic expert Ngô Trí Long said that developing social rental housing projects would contribute to changing the Vietnamese habit of owning a house.

Long said that clear legal framework coupled with responsibilities of renters to be specified were needed to encourage property developers to invest in this segment.

Experts said that land was one of the biggest problems in developing affordable rental housing projects, given the limited land resources in urban areas.

According to the Ministry of Construction, by 2020, Việt Nam would need around 1 million apartments for low-income earners but the current supply was only at around 10,000 units per year.

At a meeting in 2012 of the Central Steering Committee on Housing Policy and Real Estate Market, the government stressed that priority should be placed on developing rental housing projects.

Under the Government’s Decree 100/2015/NĐ-CP on social housing development and management issued on October 20, 2015, property developers of social housing projects which would be used for rent only could borrow up to 80 per cent of the total investments in up to 20 years.