File photo of a social housing project in the southern province of Binh Duong. The lending rate for social housing loans has risen to 5% per year. (Photo: Hung Le)
Borrowers who can access loans for buying social homes include those who have made a contribution to the country’s revolutions; low-income people and workers in industrial zones and export-processing zones; and employees working in public security and military units.The lending rate is applicable to borrowers who take out loans to buy or rent social housing; build; or renovate and repair houses. The minimum loan term is 15 years from the date the first loan amount is disbursed. Borrowers can negotiate with banks if they want to extend or reduce the minimum loan term.
Decision No.255 took effect immediately, on being approved by the Prime Minister, replacing Decision No.117, dated January 22, 2018. Earlier, the annual lending rate for social housing loans was 5%, as regulated in Decision No.117, but it was reduced to 4.8% in April last year.
Under previous regulations on buying or renting social housing, borrowers can take out loans up to 80% of the value of the social housing purchase or rental contract. As for building or renovating houses, the highest loan amount would be 70% of the houses’ financial estimates and cannot exceed 70% of the collateral’s value.
There is an urgent demand for social housing in the country, stated construction experts, as 70% of Vietnam’s population are at working age. Also, the population in the two major cities of HCMC and Hanoi is on the rise, while land for developing infrastructure projects for houses, transportation and public services is running out.
Meanwhile, social housing projects have seen slow progress and many obstacles, with credit capital remaining the main bottleneck.
