House prices will be high if 20% of land fund is used for social housing

A hot issue affecting the supply of social housing is not as expected because many commercial housing projects are having a "headache" with the regulation of reserving 20% ​​of the project's land fund for social housing.

The 2023 Housing Law stipulates that investors of commercial housing projects must reserve 20% of the land fund or arrange other land funds for social housing, or pay in cash.However, Ho Chi Minh City is still considering developing criteria for implementation.

Decree No. 100/2024 on the development and management of social housing has specified the area for performing obligations as 20% of the total land area of ​​​​commercial housing projects.The decision on one of the three forms above is considered by the Provincial People's Committee.

However, according to feedback from businesses, commercial housing projects in Ho Chi Minh City are still stuck in the issue of reserving land for social housing development.At the 253rd Dialogue Conference between enterprises and the Ho Chi Minh City government organized by ITPC and the Department of Construction recently, Mr. Nguyen Van Doi, General Director of Saigon 9 Company, said that enterprises doing real estate projects are waiting for the City People's Committee to issue criteria to guide enterprises in choosing 1 of 3 forms of social housing obligations.

This enterprise proposed a solution, that enterprises will pay in cash, instead of allocating 20% ​​of the land fund for social housing, Ho Chi Minh City will then invest in a large enough land fund of 200 - 300 hectares in the suburbs to implement.Because, on some central routes, if based on the newly issued adjusted land price list, the cost of social housing will be very high.

For example, if social housing is built on Dong Khoi Street, District 1 (according to the land price list, the price is 763.6 million VND/m2), the cost of social housing will be around 276 - 386 million VND/m2.Or the lowest is on Rung Sac Street, Can Gio District (according to the land price list, the price is 20.9 million VND/m2), the price of social housing is also around 45-70 million VND/m2.

A typical example given by this enterprise is that, in Thu Duc City, the Van Phuc City project when handing over the land fund for social housing, the leader of Thu Duc City said that if they received a small amount of that area, it would only freeze, that is, create a blood clot because it could not develop social housing.Because the state land price in this project is 73 million VND, while the market price is more than 100 million VND.

The report of the Ho Chi Minh City Real Estate Association (HoREA) also provided information that since the regulations on the implementation of social housing construction obligations of investors in commercial housing projects have come into effect, HoREA has found that there are many urban and commercial housing projects with a scale of up to tens or hundreds of hectares, but there is almost no sign of social housing in the project.Most investors have proposed to be paid in cash equivalent to the value of the 20% residential land fund and there has not been any case of exchanging social housing land in another location equivalent to the value of the 20% residential land fund.

However, a representative of the Ho Chi Minh City Department of Construction said that the current issue of exchanging land or exchanging the value in cash is a difficult story and currently the sectors are also discussing it with each other.Because exchanging land between locations or exchanging the value in cash is currently very complicated, Ho Chi Minh City is making efforts to develop clear regulations for application.