PROTECTING THE RIGHTS OF SOCIAL HOUSING BUYERS IN SOCIAL HOUSING PURCHASE AGREEMENTS

PROTECTING THE RIGHTS OF SOCIAL HOUSING BUYERS IN SOCIAL HOUSING PURCHASE AGREEMENTS

PROTECTING THE RIGHTS OF SOCIAL HOUSING BUYERS IN SOCIAL HOUSING PURCHASE AGREEMENTS

PROTECTING THE RIGHTS OF SOCIAL HOUSING BUYERS IN SOCIAL HOUSING PURCHASE AGREEMENTS

Đào Thị Diệu Thương

M.A., Faculty of Law, Saigon University

ABSTRACT

The social housing policy is one of the policies created to meet the demand for affordable housing for individuals eligible for social housing support policies. Therefore, unlike regular real estate purchase agreements, the purchasers in social housing purchase agreements must satisfy certain conditions. This issue is currently regulated by the 2014 Law on Housing (effective until August 1st, 2024, and replaced by the 2023 Law on Housing). This article will discuss the provisions of the 2023 Law on Housing regarding eligible subjects for social housing purchase policies, thereby proposing solutions to improve the legislation on this issue.

Keywords: real estate buyers, purchase agreement, social housing

I. INTRODUCTION

Social housing is a special type of housing supported by the State for individuals eligible for social housing policies, sold at a price lower than the market price. This type of housing plays an important role in providing accommodation for people living and working in urban areas in Vietnam. In reality, the demand for social housing in Vietnam is currently very high, and the supply of social housing does not meet this demand. To benefit from the social housing policy according to Vietnamese law, individuals and organizations must meet certain conditions.

Specifically, individuals and organizations must be eligible for social housing policies and must comply with the mandatory conditions stipulated by law to become buyers of social housing real estate. However, these regulations currently face many inadequacies. Additionally, there are numerous limitations in the credit policy and purchase price policy that affect the rights of real estate buyers. To clarify this issue further, let us explore the following contents.

II. OVERVIEW OF THE LEGAL REGULATIONS ON PROTECTING THE RIGHTS OF REAL ESTATE BUYERS IN SOCIAL HOUSING PURCHASE AGREEMENTS

  1. Subjects and conditions for benefiting from housing support policies

Due to the specific nature of social housing policies, not all entities can become buyers in social housing purchase agreements. Therefore, this section will address the subjects eligible for social housing support policies.

According to Article 76 of the 2023 Law on Housing, the subjects eligible for social housing support policies include the following:

First, people with meritorious services to the revolution, relatives of martyrs who are eligible for housing improvement support according to the Ordinance on Incentives for People with Meritorious Services to the Revolution.

Second, poor and near-poor households in urban or rural areas frequently affected by natural disasters and climate change.

Third, low-income groups in urban areas.

Fourth, groups of workers and employees working at enterprises, cooperatives, unions of cooperatives inside and outside industrial zones; officers, professional soldiers, non-commissioned officers of the People’s Armed Forces, police workers, civil servants, defense officials and defense civil servants in active service; cryptographic workers and other employees in cryptographic organizations receiving salaries from the state budget; officials, civil servants, and public employees according to the law on officials, civil servants, and public employees.

Fifth, individuals who have returned public housing.

Sixth, households and individuals whose land has been acquired and who must evacuate and demolish their housing without being compensated by the State with housing or residential land.

Seventh, students, university students, academies, universities, colleges, vocational schools, specialized schools according to the law; students of public ethnic boarding schools.

Eighth, enterprises, cooperatives, and unions of cooperatives in industrial zones. 

Thus, compared to the 2014 Law on Housing, a new subject added is enterprises, cooperatives, and unions of cooperatives in industrial zones. It can be seen that the housing law in Vietnam has expanded the subjects eligible for social housing policies, targeting groups that need State support for housing.

These subjects must also satisfy the conditions stipulated in the 2023 Law on Housing to become real estate buyers in social housing purchase agreements. These conditions are specified in Article 76 of the 2023 Law on Housing with the following specific criteria:

First, housing conditions: for the subjects specified in Clauses 1, 4, 5, 6, 7, 8, 9, and 10 of Article 76 of the 2023 Law on Housing, to purchase or lease social housing, they must not own housing in the province or centrally-run city where the social housing investment project is located, have not purchased or leased social housing, and have not received housing support policies in any form in the province or centrally-run city where the social housing investment project is located.

Or, they own housing in the province or centrally-run city where the social housing project is located, but the per capita housing area is lower than the minimum housing area. For subjects specified in points b, c, d, đ, e, and g of Clause 1, Article 45 of the 2023 Law on Housing, they must not be living in public housing.

Second, income conditions: the subjects specified in Clauses 5, 6, 7, and 8 of Article 76 of the 2023 Law on Housing, to purchase social housing, must meet the income conditions stipulated by the Government. The subjects specified in Clause 4 of Article 76 of the 2023 Law on Housing must belong to poor or near-poor households according to the Government’s regulations.

Additionally, for the subjects specified in Clauses 2 and 3 of Article 76 of the 2023 Law on Housing, if they are eligible to purchase social housing according to Clause 1 of Article 77 of the 2023 Law on Housing, they must meet the following conditions: housing conditions specified in Point a, Clause 1 of Article 76, not having benefited from housing support policies specified in Clause 3 of Article 77, and belonging to poor or near-poor households according to the Government’s regulations.

Along with these conditions, the subjects eligible for social housing policies must provide documents and materials to prove their eligibility for social housing policies and their compliance with the conditions stipulated in Decree No. 49/2021/ND-CP dated April 1st, 2021, of the Government, amending and supplementing a number of articles of Decree No. 100/2015/ND-CP dated October 20th, 2015, on the development and management of social housing.

Thus, it can be seen that Vietnamese law currently lists the groups eligible for social housing policies along with specific conditions. Satisfying both criteria allows one to become a buyer in social housing purchase agreements.

  1. Preferential credit policies for social housing buyers

First, subjects eligible for preferential credit policies for purchasing social housing.

Theoretically, subjects eligible for preferential credit policies for purchasing social housing must be low-income earners. The concept of low income is currently understood as individuals working at agencies, units, enterprises of various economic sectors, or freelancers in urban areas, with an income not subject to regular income tax as stipulated by housing law and personal income tax law.

(Clause 2b, Article 1 of Decree No. 49/2021/ND-CP dated April 1st, 2021, amending and supplementing a number of articles of Decree No. 100/2015/ND-CP dated October 20th, 2015, on the development and management of social housing. Section 1 of Official Letter No. 395/BXD-QLN dated March 3rd, 2015, guiding the implementation of housing loan support under Circular No. 17/2014/TT-BXD of the Minister of Construction).

Currently, according to Clause 10, Article 1 of Decree No. 49/2021/ND-CP dated April 1st, 2021, amending and supplementing a number of articles of Decree No. 100/2015/ND-CP dated October 20th, 2015, on the development and management of social housing, the subjects eligible for preferential loans (borrowers) include:

  1. People with meritorious services to the revolution according to the law on incentives for people with meritorious services to the revolution;
  2. Low-income individuals, poor and near-poor households in urban areas;
  3. Workers working at enterprises inside and outside industrial zones; officers, non-commissioned officers in professional operations, technical non-commissioned officers, professional soldiers, workers in agencies and units of the People’s Public Security and People’s Army, and officials, civil servants, and public employees according to the law on officials, civil servants, and public employees.

Second, conditions for applying preferential credit policies to purchase social housing.

To be eligible for preferential loans when purchasing social housing, borrowers must meet the following conditions:

a) Have sufficient minimum capital to participate in the loan method as prescribed by the Vietnam Bank for Social Policies or the credit institution designated by the State;

b) Have adequate documents as stipulated in Article 22 of this Decree;

c) Have a source of income and the ability to repay the loan as committed to the Vietnam Bank for Social Policies or the credit institution designated by the State;

d) Have a loan application to purchase or lease-purchase social housing, including a commitment from the individual and family members that they have not received any housing or land support policies at their place of residence;

e) Have a purchase or lease-purchase agreement for social housing with the investor as prescribed by this Decree and housing law;

f) Secure the loan with assets formed from the loan capital as prescribed by law. The lending bank, the investor, and the borrower must clearly specify the management and handling methods of the secured assets in a tripartite agreement. (Clause 10, Article 1 of Decree No. 49/2021/ND-CP dated April 1st, 2021, amending and supplementing a number of articles of Decree No. 100/2015/ND-CP dated October 20th, 2015, on the development and management of social housing).

Additionally, according to the guidance of the Ministry of Construction in Official Letter No. 1551/BXD-QLN dated May 10th, 2023, social housing buyers must have a purchase agreement with the investor to be eligible for the VND 120 trillion credit package. Accordingly, in addition to meeting the conditions and criteria stipulated by the credit law as guided by the State Bank of Vietnam, borrowers of the VND 120 trillion credit program must also satisfy the conditions and criteria set by the Ministry of Construction. For buyers of social housing and worker housing (social housing in industrial zones), they must have a social housing purchase agreement with the investor as prescribed by housing law (Lam, 2023).

Thus, it can be understood that the first condition that borrowers must meet to be eligible for a loan to purchase social housing is to “have a purchase, lease, or lease-purchase agreement for social housing with the investor as prescribed by this decree and housing law” (Point đ, Clause 2, Article 16 of Decree No. 100/2015/ND-CP, amended and supplemented by Point đ, Clause 2, Article 16 of Decree No. 49/2021/ND-CP).

Additionally, social housing buyers must also adhere to the principles of implementing preferential loan policies. Accordingly, borrowers must save monthly at the Vietnam Bank for Social Policies for a minimum of 12 months, with the deposit amount stipulated by the Vietnam Bank for Social Policies (Clause 5, Article 13 of Decree No. 100/2015/ND-CP and Circular No. 20/2021/TT-NHNN amending and supplementing Circular No. 25/2015/TT-NHNN).

Third, loan term and interest rates applied when benefiting from preferential credit policies to purchase social housing.

Regarding the loan term to purchase social housing, it is determined by an agreement between the bank and the customer, suitable to the customer’s repayment ability, and not exceeding 25 years from the date of the first loan disbursement (Point đ, Clause 10, Article 1 of Decree No. 49/2021/ND-CP). Previously, according to Clause 6, Article 16 of Decree No. 100/2015/ND-CP, the minimum loan term was 15 years. Thus, the law has shifted from setting a minimum limit to setting a maximum limit, thereby extending the loan term and reducing the pressure of principal repayment for low-income borrowers.

Interest rates depend on the lending interest rates at the Vietnam Bank for Social Policies, determined by the Prime Minister based on the proposal of the Board of Directors of the Vietnam Bank for Social Policies for each period. For designated credit institutions, the interest rates are determined by the State Bank of Vietnam and announced based on the principle that they do not exceed 50% of the average lending interest rates of commercial banks during the same period (Clause 5, Article 16, Decree No. 49/2012/ND-CP).

However, this regulation conflicts with Resolution 33/NQ-CP dated March 11th, 2023, in which the Government decided to lend at an interest rate 1.5-2% lower than the medium and long-term lending interest rates of commercial banks and eligible non-state banks, for specific credit packages during each period. The overlap in regulations related to preferential interest rates has led to many difficulties in practical application for borrowers when accessing preferential loans.

III. PRACTICAL APPLICATION OF LEGAL REGULATIONS ON PROTECTING THE RIGHTS OF REAL ESTATE BUYERS IN SOCIAL HOUSING PURCHASE AGREEMENTS

  1. Subjects and conditions for benefiting from housing support policies

Promoting social housing development programs within the National Housing Development Strategy for the 2021-2030 period, with a vision towards 2045, approved by the Prime Minister, as of now, the country has completed 301 social housing projects in urban areas and worker housing in industrial zones, with a construction scale of approximately 155,800 units, totaling over 7,790,000 m².

Currently, the country is continuing to implement 401 projects, with a construction scale of approximately 454,360 units totaling about 22,718,000 m². Among these, 245 projects, with a scale of 300,000 units, are in the investment procedure stage, and 156 projects, with a scale of 156,700 units, are under construction. However, these results have not yet met the goal (as of 2020) of completing 12,500,000 m² of social housing and worker housing (Nguyễn, 2023).

As of April 2023, according to the Ministry of Construction, 307 urban social housing projects have reached 157,100 customers, mainly those eligible for social housing purchase according to the regulations. These include people with meritorious services to the revolution; poor and near-poor households in rural and urban areas; low-income individuals in urban areas; industrial zone workers; officers, soldiers, and workers in police and military units; households, and individuals subject to land acquisition without compensation (Đức, 2023).

Current regulations on subjects and conditions for benefiting from social housing policies have shown many limitations in practice. Recent statistics indicate that 80% of social housing buyers leave after 2 years, with only 20% remaining.

The 2020 audit report by the State Audit Office revealed that in 5 audited projects in Ho Chi Minh City, 85 cases showed signs of social housing buyers or tenants already owning housing; 64 cases involved social housing buyers or tenants conducting authorization transactions regarding social housing (Nguyễn, 2023).

This shows that many social housing units are allocated to the wrong subjects, undermining the humanitarian purpose of the social housing development program. In fact, there are many cases where individuals who are not eligible for social housing support policies manage to benefit from them by declaring their dependents as parents to reduce family deductions, thus avoiding personal income tax, or by falsely claiming that they do not own a house and subsequently obtaining a social housing unit. Meanwhile, truly low-income individuals are unable to purchase social housing due to their inability to provide the required documentation as assessed by the reviewing units, as these buyers often lack knowledge.

  1. Preferential credit policies for social housing buyers

– Regarding the requirement to have a social housing purchase agreement to qualify for preferential loans:

Despite efforts to implement numerous social housing projects, the supply of housing in recent times has still not met the demand of social housing buyers. The 1-million-unit social housing project proposal by the Ministry of Construction submitted to the Prime Minister for approval according to Notification No. 242/TB-VPCP dated August 10th, 2022, of the Government Office, announcing the conclusions of Prime Minister Phạm Minh Chính at the online conference on promoting social housing development for workers and low-income individuals, is very low compared to the market demand of 2.6 million units for the 2021-2030 period (Nguyễn, 2023).

This leads to fierce competition among social housing buyers to sign purchase agreements and thereby qualify for preferential credit policies. Currently, this is a significant barrier for social housing buyers to access preferential loans.

– Regarding the difficulty borrowers face when having to save money to qualify for preferential loans:

Moreover, to benefit from preferential credit policies, social housing buyers must adhere to the principle of implementing preferential loan policies, which means they must save monthly at the Vietnam Bank for Social Policies for a minimum of 12 months, with the deposit amount stipulated by the Vietnam Bank for Social Policies (Clause 5, Article 13 of Decree No. 100/2015/ND-CP and Circular No. 20/2021/TT-NHNN amending and supplementing Circular No. 25/2015/TT-NHNN).

The target borrowers of preferential credit packages are often low-income individuals who need support through preferential loans to purchase social housing. However, having to save money monthly while repaying the principal and interest to the bank poses a significant challenge for them, as they must comply with the savings amount stipulated by the Vietnam Bank for Social Policies.

– Regarding interest rates applied to preferential loan packages:

The overlap in regulations related to preferential interest rates has led to many difficulties for borrowers when accessing preferential loans in practice.

IV. RECOMMENDATIONS FOR IMPROVING THE LEGAL FRAMEWORK TO PROTECT THE RIGHTS OF REAL ESTATE BUYERS IN SOCIAL HOUSING PURCHASE AGREEMENTS

  1. Subjects and conditions for benefiting from housing support policies

In some countries considered successful in social housing development, particularly Singapore, where social housing is affordable for citizens, the homeownership rate currently stands at 88.9% (Lê, 2022). The legal regulations in this country do not list specific subjects eligible to purchase social housing but establish a single state agency responsible for researching, developing, distributing, maintaining, and managing social housing, namely the Housing and Development Board (HDB). This agency sets specific conditions that Singaporean citizens must meet to engage in social housing transactions, without restricting any particular subject from benefiting from social housing policies. As a result, social housing in Singapore is also referred to as HDB flats.

Đánh giá các quy định hiện hành của pháp luật Việt Nam hiện nay, tác giả đề xuất một số kiến nghị sau đây để hoàn thiện quy định của pháp luật về đối tượng được hưởng chính sách nhà ở xã hội cụ thể như sau:

First, there should be regulations that generalize the subjects eligible for social housing policies, with a trend towards expanding to all individuals in need.

Expanding the eligible subjects will allow those who truly need social housing to access it, as only low-income individuals, those unable to afford commercial housing, or those without land for building homes seek social housing. Specifically, the subjects eligible for social housing support policies can be identified as low-income individuals, poor and near-poor households, and households in difficult circumstances. Therefore, the author proposes to amend Article 76 of the 2023 Law on Housing as follows:

  1. Subjects eligible for social housing support policies:
  2. Low-income individuals;
  3. Poor, near-poor, and struggling households;
  4. Students of academies, universities, colleges, vocational schools; students of public ethnic boarding schools, allowed to use social housing during their study period;
  5. Enterprises and cooperatives according to the law on enterprises and cooperatives.

Such regulations will expand the eligibility for social housing to include any individual seeking a home of their own for stability and work, but who does not yet have the means to own commercial housing. Poor, near-poor, and struggling households, which face financial difficulties in purchasing high-value assets like houses, also need a stable place to live to escape poverty. Students are a special case as they have not yet established stable personal incomes, so expanding eligibility to include them is necessary. Finally, special enterprises and cooperatives are also eligible for social housing if they have a genuine need.

Second, amend the conditions for benefiting from social housing policies comprehensively and appropriately for each group of subjects.

The primary goal of social housing policies is to support low-income individuals and those facing housing difficulties. Therefore, the most crucial group to target is low-income earners. However, to identify this group, additional conditions beyond the criterion of not paying personal income tax need to be established, as this criterion has many limitations that may exclude those who should benefit from social housing policies.

To determine whether an individual’s income is low, it must be compared with the type and price of social housing and the income of the social housing buyer over a reasonable period. Social housing buyers must prove their income before registering for social housing benefits. The State should specify the corresponding income levels for each type of housing.

Third, establish a dedicated information system on social housing purchases in the area.

This information system will publish all issues related to social housing, from planning and construction plans, regulations on eligible subjects and conditions for purchasing social housing, to regulations on procedures and document templates for completing applications (Trần & Lê, 2019).

  1. Preferential credit policies for social housing buyers

The regulation at Point đ, Clause 2, Article 16 of Decree No. 100/2015/ND-CP, amended and supplemented by Decree 49/2021/ND-CP, should be revised to eliminate the requirement of having a social housing purchase agreement to qualify for preferential loans. This change would facilitate low-income individuals in accessing preferential loans, providing them more opportunities to stabilize their lives.

There needs to be consistency in preferential interest rates as there are currently conflicts among different documents. Harmonizing the regulations on interest rates is necessary to avoid obstacles during implementation.

V. CONCLUSION

Social housing is a humanitarian policy that supports low-income individuals in securing stable housing, helping them to improve their lives. To effectively implement this policy, especially in the context of social housing purchase, we need a robust legal framework to protect the rights of social housing buyers. Ensuring this will contribute to the effective support of social housing policies and, in the long run, promote economic development, improve people’s lives, and significantly contribute to the country’s economic growth.

REFERENCES

  1. Đức, M. (2023). Who has bought social housing? Retrieved from https://vnexpress.net/nhung-ai-da-mua-nha-o-xa-hoi-4600782.html
  2. Lam, D. (2023). A housing purchase agreement is required to qualify for the VND 120 trillion credit package. Retrieved from https://laodong.vn/bat-dong-san/phai-co-hop-dong-mua-nha-moi-duoc-vay-goi-120000-ti-dong-1187149.ldo
  3. Lê, D. (2022). Singapore and the success story in social housing development. Retrieved from https://bnews.vn/singapore-va-cau-chuyen-thanh-cong-trong-phat-trien-nha-%20o-xa-hoi/259690.html
  4. Nguyễn, T. (2023). Creating resources for social housing development. Retrieved fromhttps://nhandan.vn/tao-nguon-luc-phat-trien-nha-o-xa-hoi-post742346.html
  5. Nguyễn, N, D. (2023). Social housing: Avoiding both scarcity and excess. Retrieved from https://nld.com.vn/ban-doc/nha-o-xa-hoi-tranh-vua-thieu-lai-vua-e-2023030720270955.htm
  6. Nguyễn, T, K. (2023). Some solutions to enhance the efficiency of state management in social housing development for the 2021-2030 period. Retrieved fromhttps://moc.gov.vn/tl/tin-tuc/74777/mot-so-giai-phap-nang-cao-hieu-qua-quan-ly-nha-nuoc-ve-phat-trien-nha-o-xa-hoi-giai-doan-2021-2030.aspx
  7. Trần, V, P., Lưu, H, D., & Lê, M, V. (2019). Inadequacies in the legal regulations on social housing for low-income people and proposals for improvement. Retrieved fromhttps://danchuphapluat.vn/bat-cap-trong-quy-dinh-phap-luat-ve-nha-o-xa-hoi-cho-nguoi-thu-nhap-thap-va-kien-nghi-hoan-thien

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