VietNamNet Bridge – The Ministry of Construction has called for the establishment of a housing-development fund to help low-income earners become home owners.

However, concerns have been raised about the feasibility of the fund, as it would require buyers to stump up 30 per cent of the property's value and then settle in full in five years' time.

Prospective home-owners would be lent a maximum of two times the sum they had contributed to the fund, and would have to pay back the loan within 15 years at an annual interest rate of 6.5 per cent to 8.5 per cent.

If they do not require a loan, they would instead receive 2 per cent interest on their contribution above the lending rate at the time of their contribution, annually.

Nguyen Van Duc, deputy director of Dat Lanh Real Estate Company, said the fund would not help those on low incomes as they would still be required to contribute 30 per cent of the property's value, which would amount to VND5 million (US$238) every month for a house costing VND1 billion ($47,600), for example.

It would be difficult for low-income earners if they had to spend 90 per cent of their income on daily living, Duc said.

He said low-income earners could buy a property if its value was less than VND500 million ($23,800) because then they would have to pay VND2.5 million ($119) each month. A low-income earner on Ha Noi's Vong Street said his monthly income was VND11 million ($523), which had to go on supporting three people. He said it was possible to save just VND1 million ($47) each month, which could potentially go to the fund.

Pham Sy Liem, vice chairman of the Viet Nam Construction Association, said potential home owners would need a monthly income of at least VND8-10 million ($380-476) to access the fund.

Liem said the Government should give priority to property firms investing in low-cost housing.

He suggested lending 80 per cent of the property's value, while low-income earners should contribute 20 per cent.

In addition, the Government should not stipulate a time period for repayment to the fund.

Nguyen Huu Nguyen, from the Southern Economic Research Centre, said the ministry should carry out pilot surveys in Ha Noi and HCM City to clearly establish low-income levels in the respective cities.

The ministry would then be able to accurately calculate the capital contribution to the fund that could be made on the information provided.

Deputy Minister of Construction Nguyen Tran Nam said the ministry would collect ideas from relevant agencies and the public nationwide to complete the project.

The ministry in 2010 also proposed setting up a fund that required people to contribute 1-2 per cent of their monthly salary. However, the proposal stirred public controversy.

The fund is expected to become operational in 2013.

VietNamNet/Viet Nam News