Preferential loans for social housing: 5 new points need to know in Vietnam

The State Bank of Vietnam has just promulgated Circular 20/2021/TT-NHNN amending and supplementing Circular 25/2015/TT-NHNN guiding concessional loans to implement social housing policies. According to that, there are some notable new points as follows:

Preferential loans to build social housing: 5 new points need to know (Illustrate image)

1. Amendment to the subject of preferential loans in Vietnam

Subjects eligible for preferential loans to implement social housing policies include:

- Borrowers for investment in social housing construction specified in Clause 1, Article 15 of Decree No. 100/2015/ND-CP.

- Borrowers for new construction or renovation or repair of residential houses specified in Clause 1, Article 16 of Decree No. 100/2015/ND-CP.

(Compared to the current situation, removing "borrowers to buy, rent social housing")

2. Regulation on upper limit imposed on social housing construction in Vietnam

Circular 20/2021/TT-NHNN  of Vietnam has added regulations on the maximum loan amount for new construction or renovation and repair of social housing as follows:

For customers taking preferential loans for new construction or renovation or repair of their houses, the maximum loan amount is 70% of the estimated value or the loan plan, not exceeding VND 500 million and 70% of the value of the loan collateral.

Currently, Circular 25/2015/TT-NHNN of Vietnam does not stipulate the maximum loan amount.

3. Regulation of maximum loan term in Vietnam

Currently, Circular 25/2015 of Vietnam stipulates for customers who borrow money to build new or renovate or repair houses for living, the minimum loan term is 15 years from the date of first loan disbursement. .

According to the new regulations, the loan term is agreed upon by the bank and the customer in accordance with the customer's repayment ability and must not exceed 25 years from the date of first loan disbursement.

In conclusion, Circular 20/2021 stipulates the maximum loan term not exceeding 25 years instead of the current minimum loan term.

4. Amendment of regulations on lending interest rates in Vietnam

Loan interest rates applied from January 20th, 2022 are regulated as follows:

- Preferential lending interest rates for customers who borrow capital to invest in social housing construction shall be determined and announced by the State Bank of Vietnam each period.

- Preferential lending interest rates for customers for new construction or renovation or repair of residential houses shall be determined and announced by the State Bank of Vietnam each period.

(Compared to the current one, the regulations for customers who borrow money to buy or rent social housing have been removed.)

- Preferential loan interest rates ensure the following principles:

+ Not exceeding 50% of the average lending interest rate of commercial banks in the same period; (Currently, it is not exceeding 50% of the average lending interest rate of banks in the market during the same period)

+ Preferential lending interest rates for social housing builders for lease are lower than those for social housing builders for lease and purchase.

5. Replace the loan report form in Circular 25/2015/TT-NHNN of Vietnam

Replace Form 01 and Form 02 in Circular 25/2015 with Form 01 and Form 02 issued together with Circular 20/2021.

Circular 20/2021/TT-NHNN of Vietnam takes effect from January 20th, 2022,

Bao Ngoc

 

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