In 2009, the Government issued many polices and regulations to govern and instruct the development of low-cost housing projects under a country-wide program to offer affordable homes for the poor. However, the regulations have seemed to cause confusion to both management departments and local homebuyers as low-income earners, the proper beneficiaries of the policies, have found themselves unable to buy the condos. Meanwhile, those without real demand for inexpensive houses have easily reached the projects.

Deputy Construction Minister Nguyen Tran Nam says the concerns are understandable as low-income residents in Vietnam have a strong housing demand. Meanwhile, the low-cost housing market will certainly see supply and demand imbalance as the nation has started few projects, he says.

To cope with the problem, the ministry issued Circular 36 late last year under which homebuyers have to meet several regulations to benefit from low-cost housing policies. They have to obtain written confirmation from employers and local authorities regarding their level of income.

Speaking at a seminar reviewing 2009’s low-cost housing market in Hanoi last week, Nguyen Van Hung, former president of Hanoi University of Construction, suggested the Government offer specific polices and incentives to attract more investors to the segment. “The nation should not impose the profit ratio limit of 10% on enterprises,” Hung was quoted by Tuoi Tre newspaper.

In fact, the regulations have caused many challenges for investors of low-cost housing projects.

“Non-state enterprises must have a strong will for developing the projects as they have to overcome too many difficulties, from the profit limit of 10% to regulations of proper homebuyers and administrative procedures,” lawyer Nguyen Hoang was quoted by Thoi bao Kinh te Sai Gon.

The Government has offered preferential policies in taxes, land use fees, rentals and credits for homebuyers while investors suffer losses if their projects fail to attract customers. “Although the investors enjoy a certain number of incentives from the Government, they still have to cope with tough conditions of the market. As a result, no enterprises dare to be sure that they would sell all the condos of a project,” Hoang explains.

Hoang adds that the Government should provide insurance policies to reassure enterprises. For instance, if enterprises fail to sell the projects due to any objective reason, the Government should buy the condos from the investors. This is a way to encourage more enterprises to join the market, Hoang says.

On the other hand, homebuyers also suffer contradictions from the regulations. They are only allowed to sell or lease the condos out ten years after signing contracts with investors. Otherwise, they are required to sell or transfer the condos to the State or the investors.

“Although low-income homebuyers can receive preferential policies, the regulations seem to prevent them to use their own properties as they wish,” Hoang notes.

Last year saw a large number of low-cost housing projects under this program expanded and social awareness has been raised on the accommodation needs of low-income residents. However, the Government needs to support enterprises and sustain development for the property segment, Nam says.