Developers shun public houses
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A huge shortfall in housing for public servants persists in both Ho Chi Minh City and Hanoi though a slew of projects kicked off four years ago.
Analysts expect more than 22,000 out of 148,000 public servants and armed forces personnel in HCMC to apply for buying or renting houses by 2015.
However, the Department of Construction said only 4,500 will be able to buy public housing while the rest will be offered low-cost houses.
According to regulations, people working for government departments or the armed forces for at least three years and living in a leased house are eligible buy a public house.
Statistics from the Department show 8,300 public houses were built in HCMC in the last five years at more than VND422 billion (US$21 million), but only 84 have been sold.
Buyers have to make a down payment of 20 percent of the cost and pay the rest in installments over 15-20 years.
The Department expects more than 6,500 public housing projects with 22,400 units to be completed in the next five years.
Hanoi has only four public housing projects under way, with three of them funded by the city and the other by private funds, according to the Department of Construction.
The number of public houses is “small” compared to the number of low-income earners, Nguyen Quoc Tuan, deputy director of the Department, said.
HCMC authorities encourage property developers to build housing on public lands in an attempt to cut spending.
In return, they can use the land for free and get VAT waiver and permission to build up to 1.5 times the regulated size.
The government will also waive income tax for four years and ensure a net return of 10 percent.
Yet, property firms shun public housing for offering low returns and not quickly enough. They are also worried about the fact that buyers have to meet several requirements.
A director of a property company, who asked to be unnamed, said developers will not make profits at the 10 percent rate guaranteed since many expenses cannot be shown in account books.
Public housing projects will be more attractive to property firms if the government buys back the houses after they are built, a member of the council approving lease of such houses, told TuoiTre.
Tuan also called for policies that offer greater flexibility for developers.
