Mr. Jonathan Tizzard, National Head of Valuation & Research at Cushman & Wakefield Vietnam, spoke with VET about MoC proposal to increase maximum area from 70 sq m to 90 sq m.
|Mr. Jonathan Tizzard
National Head of Valuation & Research at Cushman & Wakefield Vietnam
The Ministry of Construction (MoC) has proposed that the maximum area of social housing apartments be increased to 90 sq m from the current 70 sq m. How would this regulation impact on property developers if approved?
This proposal will be very welcome for developers that have existing residential developments that have stalled, as it will make it easier and cheaper to convert them into social housing projects. Developers, especially a few years ago, developed large apartments, so reconfiguring them to under 70 sq m to be accepted as social housing schemes is harder than it is for 90 sq m.
What about its effect on homebuyers?
Large families wanting to purchase social housing will be able to buy a larger apartment with more room in which to live. However, many of the purchasers of these larger social housing apartments will find it difficult to afford a bigger apartment if the price per sq m remains the same.
How would you recommend local authorities proceed?
By encouraging the disbursement of subsidized loans at preferential interest rates and payment terms that will allow more people to purchase social housing. Also, encouraging developers to offer a mix of apartment sizes, from 25 sq m up to 90 sq m, will ensure the broadest cross-section of purchasers is catered for. Finally, to clear the backlog of stalled developments and to help alleviate the demand for social housing, the government could consider allowing developers of stalled projects to be classified as social housing without reconfiguring apartments to smaller sizes (perhaps as long as developers are not making a profit). And providing more homes to those that need them would help developers clear their inventory and repay loans they have defaulted on.
|Increasing the maximum area of social housing apartments to 90 sq m is part of a draft decree on the development and management of social housing projects, which is being discussed by MoC. The Ministry said that increasing the maximum area of social housing apartments aims at meeting demand for accommodation of households with seven to eight people, who find 70 sq m apartments to be too cramped.|