The local realty sector, after having a representative propose an unfeasible plan aimed at lightening their burden of unsold inventories, might breathe a sigh of relief as the state will try to support it with a new relief package.
The State Bank of Vietnam (SBV) last week announced a draft circular stipulating regulations on lending operations to support the real estate market.
The draft document is a follow-up to the government’s Resolution No 02/NQ-CP dated January 7.
Under the draft law, the central bank will set aside VND30 trillion (USD1.43 billion) to support five state-owned commercial banks, including Agribank, BIDV, Vietinbank, Vietcombank and Mekong Housing Bank, to lend to eligible borrowers through refinancing.
To carry out the policy, those state-owned commercial banks will have to spare at least 3 percent of the total outstanding loans as of the end of last year to lend to civil servants and state employees, those working in the armed forces, and low-income earners so that they can buy houses.
The loans will also be available to businesses that are investors in social housing projects, and businesses that are investors in commercial housing projects being allowed to transform into social housing ones.
The assistance package with a stable lending interest rate of 6 percent per year will be disbursed from April 15, 2013 to April 15, 2016, after which borrowers will continue to enjoy preferential interest rates that will be announced by the central bank.
A minimum loan term for house buyers and renters will be 10 years, and it will be five years for corporate customers.
Regarding loan value, house buyers/renters can borrow at least 80 percent of the value of the house they intend to buy/rent, while corporate customers can borrow up to 70 percent of their borrowing proposal.
HCMC helping hand
Ho Chi Minh City, which has a huge volume of unsold property stocks, has also released a draft document in support of the realty sector.
Accordingly, up-and-running commercial housing projects which want to be transferred into social housing must sell for no more than VND12 million ($573) per m2, inclusive of VAT.
The selling price is set on the construction cost (excluding land use fees), lending interest rate and profit level of the entire project (not more than 5 percent of the total cost), according to the HCMC Department of Construction.
Moreover, for commercial housing apartments with a floor area greater than 70m2, the maximum area for social housing apartments as prescribed, the area within the 70 m2 cap will be sold at that price, while the additional floor area will have the land use fees added.
Project investors will sell directly to the aforementioned eligible objects that get the approval from a city’s social housing assembly.
If investors do not want to turn projects into social housing, they can consider subdividing the floor areas of their apartments.
Low-income earners, civil servants, officials, and those working in the armed forces will be supported by low-interest loans if they decide to rent or buy an apartment with a floor area of less than 70m2 worth a maximum of VND15 million per m2.
However, city authorities are not considering the switch from commercial houses to social housing and resettlement housing for the projects that have not started.
According to the department, the total unsold stock in HCMC is about 14,500 apartments, more than 300,000m2 of land and about 58,800m2 of commercial offices for leasing, with an estimated total value of over VND30.4 trillion.
The Ministry of Construction has issued the Circular 02/2013/TT-BXD to adjust the housing structure of commercial houses and the transfer of commercial houses into social housing projects.
Accordingly, the Ministry of Construction requires that subdividing houses must ensure safety and conveniences for customers and have enough space for living.
The adjustment of housing structures and the conversion of commercial houses into social houses only applies for building projects which do not have capital contribution or selling and buying contracts.
If those contracts were signed, it is necessary to have a written agreement between all the customers before carrying out the adjustment.
The Circular also emphasizes the benefits of businesses which convert their projects into social houses.
Accordingly, businesses will be repaid money or have funds deducted from their financial obligations which investors have to hand over to the government.
The circular will take effect from April 22, 2013 to December 31, 2014.
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