Few accept loans to build boarding houses

Family households and individuals are shying away from applying for loans to build boarding houses for low-income earners because of requirements under Decision 18, which came into force on April 7.

The HCM City People’s Committee has offered loans but few people are taking them up on the offer.

About 90 per cent of boarding houses for workers in the city are built by households and individuals, according to the fund.

After Decision 18 became effective in April, nearly 30 people visited the Housing Development Fund to inquire about the loan, but only one person applied for a loan.

Under the loan offering, a household or individual can borrow up to 70 per cent of the value of their house, but the amount cannot exceed VNÐ1.5 billion (US$73,200) in cases of repair or VND2.5 billion ($122,000) in cases of construction of a new boarding house or additional rooms to a boarding house.

Decision 18 requires that borrowers meet several requirements to receive the loan, including a certificate to legally supply boarding-house services and a licence to build or repair a boarding house.

They must also meet regulations of the People’s Committee’s Decision 75 on boarding houses, which was issued in 2006.

Under Decision 75, a boarding house must meet several requirements, including average space for each renter, green space, common space, fire prevention and control, and adequate sanitation.

A boarding house must have an average area of at least 3sq.m for each renter, not including the area of the toilet and a common space in the boarding house.

Hai, a boarding house owner in Tan Phu District, told Tuoi Tre (Youth) newspaper that he had two boarding houses with a total of 10 rooms, which had been leased to workers for many years.

He wants to demolish one building and build a new three-storey boarding house with a total of 22 rooms on the site of the destroyed building.

However, Hai only holds a licence to build a house for personal living for his family, not for boarding renters.

When Hai went to the Housing Development Fund to apply for a loan, he was told that he would need an additional licence to build a boarding house as required by Decision 18 and meet several criteria required under Decision 75.

Hai said the requirements for the licence would force him to invest more money and charge higher rental fees for workers.

Since the issue of Decision 75, only a few households in District 6 have applied for licences to build boarding houses, according to the district’s Urban Management Office.

Most of the households, however, had applied for construction licences to build a house for personal living.

After building their home, they later took in one or two people who rented rooms but did not have a licence to build or repair a boarding house.

Decision 75 was passed to raise the quality of boarding houses and meet the basic daily living activities of workers, but many people think the requirements are unrealistic and impractical, according to an official of the fund. — VNS

Tags: Vietnam Property market, Vietnam property sector, vietnam real estate market