Opportunity to Rent Houses with Low Rates

Despite serious lack of houses for rent, especially in two cities of Hanoi and HCMC, there are a growing number of abandoned apartments without buyers. Generally in the whole country, houses for rent only account for 6.3 percent of the total number of owned houses (Hanoi City occupies 14 percent, HCMC - 19 percent and primary cities - 4-6 percent and the others take up approximately 4 percent). Meanwhile, houses for rent mostly originate from the Governmental investment (construction of dormitories for university, college students and labours in industrial zones) and households or individuals’ self-construction of houses for rent (without compliance with planning and fulfilment of minimum required standards and conditions).

 

According to real estate experts, in many developed countries in the world, the measure of creating adequate houses for rent is a crucial basis to address housing issue in urban highly populated areas. To promote this activity, the countries have all introduced preferential policies as well as built up legal framework regarding houses for rent to protect rights of both parties – lessors and renters.

 

To help speed up and handle the inventories for investors, encouraging the conversion of project building houses for sales into for-rent ones is a reasonable and necessary measure in order to increase supply of house for rent, meeting actual needs of the majority classes, especially those with low income, workers in industrial zones.

 

MoC has agreed and proposed selection of 5 projects for pilot implementation in accordance with this Decision, including: Bee Home at No. 928, Than Nhan Trung Street, Tan Binh district, and Bee Home 2 at No. 359 Pham Van Chieu Street, Go Vap District, HCMC with the investor of CT group; project of houses for workers, experts and commercial, service purpose Binh Minh (in Vinh Long province) with investor of Hoang Quan Real Estate & Service & Commerce Consulting JSC; projects of complex of houses and services in Tien Son industrial zone, houses for employees in Yen Phong industrial zone, Bac Ninh province with investor of Viglacera Corporation.

 

In addition, aiming at active implementation of pilot drafts and regulations, MoC has chaired and coordinated with localities to select some projects of commercial houses for sales, which have completed construction or with guaranteed progress to be completed in 2013 to propose for Prime Minister’s permission to be involved in pilot implementation of statutes stated in this Decision.

 

To encourage involvement of investors, MoC has introduced many preferential policies for both renters and investors. Favorable conditions will be created for investors regarding submission of land use fee, land rent, adoption of tax and corporate income tax of 10 percent for income from investment and trading of houses for rent; preferential loan interest rates at commercial and state banks.

 

The renters will be able to take loans at preferential interest rate at commercial and state banks as regulated in the Circular on loans for houses in accordance with Governmental Resolution No. 01/NQ-CP dated 7/1/2013 of the State Bank of Vietnam. The loan should not exceed 80 percent of renting contract value for lump-sum ones, and 50 percent of monthly-paid contract value for deposit (if any). The renters are also supported to make loans to buy houses from the pilot projects of houses for rent in compliance with Governmental regulations when investors put houses for sales.

 

The draft bill has included specific regulations for eligible objects and conditions for this kind of houses in the direction of expanding to all those with needs and adequate financial capacity in accordance with investors’ contracts. There are also some required conditions for those with needs of houses in pilot projects such as obtaining permanent residence in the provinces or cities where the projects are located; having at least 1 year temporary residence in the place or certified by the institutions for those working or studying with needs of renting houses.

 

Concerning rent pricing, MoC has proposed at VND35,000/m2 of constructed area/month at the maximum for projects building houses for rents for labors, workers in industrial zones. Given the exemption of land use fee, land rent and possibility of arrangement for 4-5 people, each person will only have to pay approximately VND300,000 – 350,000/month for an apartment of 40m2.

 

For those building houses in urban areas, with no exemption of land use fee and land rent, the maximum rent will be VND65,000/m2 of constructed area/month.