Vietnam Proposes Reinstating Residency Requirements for Social Housing Purchases

The Vietnam Real Estate Association (HoREA) has proposed to the government the reinstatement of residency requirements for individuals purchasing social housing. This move aims to alleviate oversubscription and better serve the needs of local residents, particularly in major urban centers like Ho Chi Minh City. In a document submitted to the Prime Minister and relevant agencies on September 22, HoREA urged the authorities to restore the "residency condition" for buyers and installment purchasers of social housing. This proposal comes in response to issues arising from the abolition of the "residency criterion" in the 2023 Housing Law, which previously required buyers to have a household registration or temporary residence registration in the locality for at least one year. HoREA argues that while the removal of residency requirements aimed to facilitate migrants, it has inadvertently allowed individuals from across the country to apply for social housing in Ho Chi Minh City. This has led to an overwhelming demand, straining urban resources and preventing housing from reaching those who genuinely live and work locally. Furthermore, HoREA continues to advocate for a reduction in preferential lending rates for social housing buyers to 4.8% per annum, aligning with the 2021-2024 period. Currently, most social housing project developers are unable to access the VND 145 trillion (approximately $725 million) credit package with a 6.1% annual interest rate. Businesses are still compelled to borrow at high commercial rates, potentially reaching 14% per annum. Conversely, the current preferential interest rate of 5.4% for homebuyers is still considered high for the financial capacity of low-income individuals. HoREA also reiterates its proposal to change the term "rent-purchase" to "installment purchase" for greater clarity and common understanding. Additionally, the association calls for the prompt amendment of regulations to incentivize the development of the rental social housing segment. This includes the 70% reduction in VAT and corporate income tax for "rental social housing projects," a policy stipulated since 2015 but yet to be implemented due to legal inconsistencies. According to government targets for 2030, Ho Chi Minh City is tasked with completing nearly 200,000 social housing units. Since the beginning of the year, the city has initiated over 11,600 units. Currently, 22 projects are under construction, comprising approximately 19,900 units, meeting about 70% of the current phase's target. Beyond ongoing construction, the city has 89 social housing projects, totaling around 97,100 units, that have received investor approval and are awaiting procedural completion for commencement. Source: VnExpress