According to the Vietnam Real Estate Market Evaluation Research Institute (VARS IRE), Vietnam has strongly developed types of housing for sale, but has almost not formed a professional, long-term rental housing system with systematic guidance from the State. The current rental market is mostly still spontaneous, small-scale, lacks synchronous planning and does not ensure a stable quality of life for people.
VARS IRE believes that in the coming period, it is necessary to better balance the investment role of real estate and the residence function of housing. A sustainable market must both meet the needs of legal asset accumulation and expand housing access for people.
Accordingly, the core issue is that people need to have access to quality housing at reasonable costs. This is also the reason why in many developed countries, rental housing is considered an important pillar of the social security system and urban stability.
In Germany, the home ownership rate is only about 46%, the lowest in Europe, but this country is still in the group with the highest quality of life in the world. Germany's success comes from a very strict legal system protecting tenants. The government applies the "Mietspiegel" mechanism - a reference rental price list announced by local authorities, thereby controlling rental price increases in each period. Homeowners cannot arbitrarily increase prices or terminate contracts without legitimate reasons as prescribed by law. This helps people feel secure in considering rented houses as stable long-term residences.
Meanwhile, Singapore chooses the model of the State playing a central role in housing development. Currently, more than 80% of Singapore's population lives in housing areas developed by the Housing Development Agency (HDB). In addition to the 99-year housing ownership model, Singapore also maintains a public rental housing system for low-income people with large subsidies from the State budget.
Notably, these residential areas not only meet housing needs but are also synchronously planned in terms of schools, healthcare, transportation and public utilities, thereby forming high-quality residential communities.
In Korea, the Government strongly develops the long-term rental housing model through the Korea Housing and Land Corporation (LH). The State directly invests or buys commercial apartments for long-term lease from 20 - 30 years for students, newlyweds and low-income people. Capital is mobilized through the National Urban Fund with preferential interest rates and long-term financial instruments. Thanks to that, Korea both ensures housing security and maintains the stability of the real estate market.
International experience shows that to develop sustainable rental housing, the role of the State is decisive. Unlike the model of housing for sale that can quickly recover capital, rental housing needs a very long time to recover capital, usually lasting from 15 - 25 years, while the profit margin is not high. If only relying on the ordinary market mechanism, the private sector is very difficult to have the motivation to participate.
Therefore, VARS IRE believes that, in parallel with promoting the implementation of the National Leased Housing Fund, Vietnam needs to change its housing development thinking, considering leased housing as an essential social security infrastructure similar to education, healthcare or public transport.
When planning large urban areas, the State should have incentive mechanisms and incentives on taxes and land use fees so that businesses can proactively develop long-term rental housing or high-quality social housing. Along with that, it is necessary to design a long-term financial system for this segment through housing savings funds, preferential credit with low interest rates and tax exemption and reduction mechanisms for businesses developing rental housing.
According to VARS IRE, without a "special institutional design", it is very difficult for the private sector to participate in this segment on a large scale.
Another important issue is that Vietnam needs to build a separate legal corridor for the rental housing market to protect the rights of tenants. Currently, tenants are always in a weak position when facing the risk of sudden price increases, unexpected contract termination or unsecured living conditions. Therefore, it is necessary to gradually form the Housing Rent Law with specific regulations on rental contracts, price increase margins, quality standards for rental housing and responsibilities of owners.
