Procedures for selection of investors in social housing projects in Vietnam

Procedures for selection of investors in social housing projects in Vietnam (Internet image)

Regarding this issue, LawNet would like to answer as follows:

1. Procedures for selection of investors in social housing projects in Vietnam

Specifically, Article 8 of Decree 100/2015/ND-CP (amended in Decree 49/2021/ND-CP) stipulates procedures for selecting investors for social housing construction investment projects as follows:

- Investors of social housing projects funded by public investment capital and state capital not allocated to public investment shall be selected in accordance with regulations of law on public investment and construction.

- Investors of social housing projects not funded by public investment capital and state capital not allocated to public investment shall be selected as follows:

+ For cases provided for in Point a Clause 2 Article 57 of the Law on Housing, investors shall be selected in accordance with regulations of law on bidding;

+ For cases provided for in Point c Clause 2 Article 57 of the Law on Housing, investors shall be selected in accordance with regulations of law on investment. Investors applying to be investors of social housing projects must be licensed for real estate trading according to regulations of law on real estate trading and determined as investors of social housing projects in the written approval for investment guidelines;

+ For cases provided for in Point d Clause 2 Article 57 of the Law on Housing, investors shall be selected in accordance with regulations of law on housing. Investors applying to be investors of social housing projects must satisfy financial conditions for project performance according to regulations of law on land and relevant law provisions.

- The Ministry of Construction shall provide guidelines for conditions and criteria for selection of investors of social housing projects.

- The Ministry of National Defense and the Ministry of Public Security are entitled to launch social housing projects in accordance with Decree 100/2015/ND-CP to provide housing for the entities specified in Clause 6 Article 49 of the Law on Housing, provided each entity only receives one house.

2. Incentives for investors in social housing projects in Vietnam

Pursuant to Article 9 of Decree 100/2015/ND-CP (amended in Decree 49/2021/ND-CP), incentives for investors in social housing projects in Vietnam are as follows:

- Investors of social housing projects not funded by public investment capital and state capital not allocated to public investment may be exempt from land levies and land rents in accordance with Point a Clause 1 Article 58 of the Law on Housing. To be specific:

+ These investors may be exempt from land levies and land rents for land allocated or leased out by the State, including land for construction of commercial works approved by the competent authority of their social housing projects.

The provincial People’s Committee shall consider and decide refund of land levy paid by the investor when receiving land from the State or land use rights from another organization, household or individual that is used for social housing construction, or land levy paid by the investor for the 20% land area, or deduction of such amount, including compensation and land clearing costs (if any), from the investor’s financial obligations to the State;

+ These investors may allocate 20% of total residential land where technical infrastructure has been invested in of their social housing projects (including projects that use 20% land) to construction of commercial housing in order to defray investment costs, reduce selling price, rent and lease purchase price of social houses, and reduce the costs of social housing management and operation after investment;

-  The investor is entitled to exemption and/or reduction of value-added tax (VAT) and corporate income tax (CIT) in accordance with Point b Clause 1 Article 8 of the Law on Housing and regulations of law on taxation.

With regard to construction of social houses for lease, the investor is entitled to 70% reduction of VAT and CIT in accordance with effective regulations of law on taxation applied to social houses.

- Investors may take concessional loans from Vietnam Bank for Social Policies or credit institutions in accordance with Point c Clause 1 Article 58 of the Law on Housing.

With regard to construction of social houses for lease, concessional loans have a minimum term of 15 years and maximum term of 20 years. If an investor wishes to take a loan for a term shorter than 15 years, the investor may reach an agreement with the bank on a loan term shorter than the minimum term.

- Investors are entitled to partial or full funding for investment in technical infrastructure of their social housing projects from the provincial People’s Committee in accordance with Point d Clause 1 Article 58 of the Law on Housing.

Full funding shall be provided for investment in technical infrastructure of social houses for lease.

In case investors finish constructing technical infrastructure of their social housing projects within 12 months starting from the date of land receipt or rent, the provincial People’s Committee shall support them in connecting technical infrastructure of their projects with regional general technical infrastructure.

- Households and individuals investing in social houses that satisfy requirements in Clause 2 Article 58 of the Law on Housing shall receive the incentives specified in Point a Clause 1, Clause 2, Clause 3, and Clause 4 of Article 9 of Decree 100/2015/ND-CP.

Ho Quoc Tuan

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