Mar 31, 2012

Vietnam - Ministry ready to submit housing saving fund scheme

The Ministry of Construction will submit to the Government the scheme on housing saving fund this April, aiming to start the pilot operation in Hanoi and HCMC late this year or early 2013.

This was informed by Nguyen Manh Ha, head of the Department of Housing and Property Market Management under the construction ministry, at the seminar on comprehensive solutions for the realty market in 2012 held by the Vietnam Real Estate Association and InfoTV in Hanoi on Wednesday.
The scheme consists of two models. The first one will focus on low-income people in need of budget housing and enterprises in search for capital to build low-cost houses, while the second one will target average-income earners.
The housing saving fund will be financed by the existing capital of the housing development fund, contributions of the fund participants, the central budget and 30% of the profits from lottery and housing bond issuance.
The fund’s mobilization rate will be equal to half of the commercial lending rate, possibly at 5% per annum, and the lending rate will be one percentage higher than the deposit rate.
Ha said the fund participants will not make contributions based on their incomes, but mostly on their demand to borrow capital in the future.
Specifically, participants will have to contribute to the fund an amount equivalent to 30% of the money they want to borrow in the future. After 4-5 years, they can access the remaining 70%, and will pay back to the fund in ten years with fixed interest rates.
The housing saving fund was originally planned to follow the model of social insurance, requiring participants to contribute 1% of their monthly incomes to the fund. Such a model is applied in many countries, but the construction ministry deemed it unfeasible in Vietnam because apart from monthly salaries, local laborers also earn from extra jobs and their own businesses.
The fund will offer loans with fixed interest rates despite volatility of the bank lending rates in order to facilitate people to access capital to purchase houses, Ha stressed.

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