Investors in low-income housing will enjoy a spate of incentives including land use/lease charge and value added tax (VAT) exemptions under a prime ministerial decision that took effect on June 10.
The decision is expected to promote housing projects for people with low incomes nationwide and expedite construction of ongoing projects in several localities.
The document stipulates incentive policies for investors, construction requirements for low-income apartment blocks, as well as criteria for beneficiaries.
Those who invest in these projects will also enjoy corporate income tax exemption for the first four years and a 12.5 percent rate for the next five, after which the rate goes up to 10 percent later on. The normal rate is currently 25 percent.
Investors will also be eligible for low-interest loans or interest-free loans if endorsed by provincial administrations.
The government will be expected to invest in infrastructure around the project sites including power and water supply, roads and other projects.
Low-income housing investors will also be offered free designs and advanced technology to reduce input costs.
The decision defines low-income housing as an apartment with a maximum area of 70 square meters. However, the proportion of housing area on project sites has been expanded by 1.5 times that allowed by current regulations, and there is no limit on the number of stories that can be built.
These apartments will have to be sold or leased out for a maximum profit of 10 percent over input costs.
Speeding up construction
The Ministry of Construction has reported 20 low-income housing projects nationwide will break ground this month, and several others in the third quarter of the year that are expected to be completed in late 2010.
The ministry has also said it would issue six circulars this month to make the construction of these projects more effective. Local authorities may be allowed to appoint contractors instead of going through the bidding process in order to cut investment costs and time.
The Ho Chi Minh City People’s Committee has earmarked four more land plots for low-income housing construction. Among these are 133 hectares at Phong Phu Commune for the Phong Phu 2 residential area and 4.6 hectares at Vinh Loc A Commune for a similar one, both located in Binh Chanh District.
The city administration also leased 3.3 hectares in Binh Tan District to IDE Vietnam Co. Ltd. for a 50-year term to construct low-income apartments and set aside a lot of 0.3 hectares in District 10 for another project.
The construction department had earlier said 14 investors have registered to build apartment blocks under 17 low-income housing projects covering a total area of 118 hectares.
Nguyen Van Danh, deputy director of the city’s Construction Department, said the apartments would have an area of between 30 and 60 square meters and priced at about VND5.3 million (US$298) per square meter.
Buyers’ requirements
Local residents are allowed to buy or rent low-income apartments in their city or province if they don’t own a house or are sharing a house with an average area of less than five meters per person, according to the Prime Minister’s decision.
These people must not have benefited from any land or housing support from the government earlier.
They have to produce proof of income from their employer and their house ownership status should be confirmed by the ward administration.
Danh said the Construction Ministry is expected to set the low-income limit for buying these apartments.
Buyers will also be offered low-interest loans to pay for their houses in full or in installments, and to rent them.
For those paying in installments, the terms will be based on an agreement with the investor but it cannot be less than 10 years, with the first installment not exceeding 20 percent of the price.
