With a view to assisting low-income people and industrial park workers in getting the opportunity to access affordable housing, on April 3, 2023, the Prime Minister issued Decision No. 338/QD-TTg ("Decision 338") approving the Project "Investment in the construction of at least 01 million social housing ("SH") for low-income people, industrial park workers in the period of 2021 – 2030".
Decision 338 has pointed out a number of shortcomings and obstacles in the process of implementing and forecasting the demand for social housing and approving a number of solutions to remove and promote investment activities and synchronize legal regulations on social investment in the period of 2021 - 2030.
Thereby, ATA Legal Services will update some new and unique preferential policies that Decision 338 offers for investors of SH project, specifically as follows:
1. Many solutions to encourage investment attraction and socialization
- Supplementing regulations on the selection of investors of worker accommodation projects in the direction of assigned industrial park infrastructure enterprises and at the same time acting as investors in building the infrastructure of worker accommodation. This proposal has been outlined in the Draft Housing Law and has been updated by the ATA at its special Legal Update for spring 2023.
- Improving the administrative procedures, and allocating budgets to support and encourage enterprises, especially large and reputable enterprises in the field of real estate to invest in social housing projects.
- Publicizing and introducing the land fund for social housing investment for enterprises to research and propose investment.
- Planning and arranging social housing projects in suitable, convenient, large-scale locations, full technical infrastructure, social infrastructure, especially big cities such as Hanoi, Ho Chi Minh City...
2. Financial and tax incentives for investors of SH projects
- Allow separate accounting for 20% of commercial land area in the social housing project, not having to account for the whole project; be accounted for reasonable and valid expenses in the process of investment and business in social housing into the cost.
- The cost of investment in technical infrastructure of accommodation is included in the cost of investment in industrial park infrastructure, the cost of worker houses is included in reasonable costs when calculating CIT.
- Investors of social housing projects for lease are entitled to more VAT and CIT reductions than in the case of building social housing for lease, purchase and sale.
- It is not required to set aside a land fund of at least 20% in social projects for lease and the business plan (sale, lease or lease purchase) is decided by the investor[1]
- Supplementing specific guidelines on the regime of exemption from land use levy and land rent for investors of social housing projects in the direction of not having to pay back the exempt land use amount when investors sell houses (along with transferring land use rights) to customers.
- Consider adding preferential policies without charging land use fees[2] to the Land Law (amended).
- The Provincial People's Committee shall be responsible for deducting a part of the land use levy of social development projects and urban areas to invest in the construction of technical infrastructure outside the project fence and support site clearance for projects.
3. Incentive on social development credit
Implement the credit program of about VND 120,000 billion with interest rates lower than about 1.5-2% compared to the average medium-long-term lending rates of state-owned commercial banks and non-state commercial banks eligible for each specific credit package.
Decision 338 takes effect from the date of issuance.
[1] Clause 3, Article 54 of the 2014 Law on Housing obliges non-regional social housing projects to set up their own social housing projects for lease, at least 20% of the social housing area in the project must be set aside for lease and investors can only sell after 5 years of putting into use.
[2] Nowadays, NOXH projects are exempt from land use levy but still have to carry out procedures for calculating land use levy for exemption.
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