Development of rental housing: Social security solutions for workers

Workers expect better quality rental housing

Mr. Tran Xuan Lap's family has been renting a house in Kim Chung worker housing area, Thien Loc commune, Hanoi for many years. The apartment is 50m2 wide, the rent is about 3-4 million VND/month, including electricity and water. The lease contract has a term of 5 years; when it expires, workers must prove that they still work in the industrial park to be extended.

According to Mr. Lap, a reasonable rental price is an important condition to help the family stabilize their lives. However, because it belongs to the group of cheap houses, the building still lacks many basic amenities, especially a playground for children. Previously, elevators often broke down, causing families on the 8th floor to walk many floors, which was very inconvenient.

Ms. Hoang Thi Nguyet, a worker in Hanoi, expressed her desire for rental housing projects to improve quality, have more essential amenities, long-term contracts and stable rental prices so that workers can feel secure and settle down.

In fact, Hanoi currently has very few housing projects specializing in renting out. Most people still have to rent small rented rooms in alleys, living conditions are cramped, lack of amenities and potential risks of fire safety. Therefore, developing affordable rental housing is considered an important solution to ensure social security for workers, especially workers, low-income people and young people in urban areas.

Concentrating resources on developing rental housing

Vice President of the Vietnam General Confederation of Labour Le Van Nghia informed that the 2023 Housing Law stipulates that the Vietnam General Confederation of Labour is one of the entities participating in social housing (NƠXH) investment. In the 2024-2025 period, the Trade Union organization focuses on implementing 3 workers' housing projects for rent.

According to the Project to develop at least 1 million social housing units by 2030, the Vietnam General Confederation of Labour is assigned to build 10,000 houses for workers in the period 2023-2030. From 2026-2030, in addition to 3 projects being implemented, the Vietnam General Confederation of Labour plans to invest in 10-15 new projects nationwide, with a scale of about 9,000 apartments.

Currently, many localities are also promoting the development of rental housing instead of just focusing on selling houses. In Ho Chi Minh City, developing rental housing is identified as a long-term strategy to "keep" human resources, improve competitiveness and develop urban areas in a civilized direction.

According to the Ho Chi Minh City Department of Construction, the city manages more than 13,600 apartments and rooms for rent and about 41,000 student accommodations, with an almost absolute exploitation rate, showing a very large demand. In the period 2021-2030, Ho Chi Minh City aims to develop about 200,000 social housing units, of which more than 50,000 units are for rent, including houses implemented by the Ho Chi Minh City Housing Development Fund, Trade Union organizations and industrial parks and export processing zones.

However, the implementation is still hindered by capital, land fund and procedures. Leased housing projects have a long capital recovery time, high commercial loan interest rates, while there is no separate preferential credit package, so it is difficult to attract investors.

Need to soon have a strong enough mechanism to encourage businesses

Dr. Nguyen Van Khoi - Chairman of the Vietnam Real Estate Association (VNREA) said that developing a reasonable rental housing market is not only about housing, but also related to national competitiveness, social security and modern urban structure. In many developed countries, rental housing accounts for a large proportion of the housing market structure. Meanwhile, in Vietnam, home ownership sentiment is still common, but house prices have now exceeded the affordability of many people, especially in large cities. "If we do not strongly develop reasonable rental housing, it will be very difficult to solve the problem of housing for workers, difficult to attract quality human resources" - said the Chairman of VNREA.

He proposed that there should soon be a strong enough mechanism to encourage businesses to invest in rental housing, such as land incentives, credit, taxes, investment procedures; developing long-term investment funds, public-private partnership models and attracting foreign businesses to participate in management and operation.

Along with that, it is necessary to develop public transport, expand urban space, reduce housing costs and directly support tenants, especially low-income people, workers, and young people. At the same time, it is necessary to form a professional, stable and civilized rental culture.

Mr. Le Hoang Chau, Chairman of the Ho Chi Minh City Real Estate Association (HoREA) proposed that the Housing Law and sub-law documents should stipulate a "green channel" on the investment process and procedures for building rental housing projects similar to the "green channel" for social housing projects such as exemption from land use fees and land rent for the area that businesses voluntarily agree to receive land use rights transfer during the project life cycle, and reasonable deduction of compensation, support and resettlement costs into the project's financial obligations.

Suitable rental housing projects should also enjoy incentives such as social housing for rent; allowing investors to only pay 30% of value-added tax and corporate income tax compared to general regulations. Lending to build rental housing is not included in the credit growth target of credit institutions to encourage banks to lend.

According to Mr. Le Hoang Chau, the cost of rent should only account for about 20% of monthly income so that workers have money to cover other expenses, including labor regeneration costs and care for their families. Management of rental housing needs a dual management model: The State stipulates a "ceiling price" to protect tenants and maintain market stability.

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