Plenty to consider around affordable housing policy

In the European Union, a key advantage lies in cross-border coordination, leveraging the collective strength of a large bloc for both technical and financial support. Germany promotes public-private partnerships, controls energy prices, and protects tenants. France mandates that 20 per cent of the total area in urban development projects be allocated to affordable housing, this applies both to individual buildings and entire neighbourhoods.

The UK focuses on rental price control policies to ensure rent increases remain moderate while Finland prioritises first-time buyers and vulnerable groups by offering rent subsidies, requiring developers to provide low-cost units, and offering long-term financial support, all targeted at low-income households.

The United States meanwhile emphasises building and maintaining rental housing for low-income families. Private sector participation is encouraged through tax incentives and bonus systems for developers building social housing. Developers may also increase building density if projects include affordable units.

Support measures include direct and indirect rental subsidies, mandates to increase the supply of affordable housing in new developments, flexible local policies, housing combined with homeless support services, and expanding affordable housing options with integrated services.

Canada has launched several notable initiatives, such as increasing federal tax funding, removing financial barriers, and creating institutional mechanisms that reward provinces with strong housing initiatives by allocating them greater state funding. This encourages localities to accelerate permitting processes, diversify direct support for vulnerable groups, and reduce energy costs.

China, since 1998, has supported households earning between $4,200 and $9,700 per year in purchasing homes of 60-110 sq.m at just 50-70 per cent of market prices. A popular initiative is shared ownership, where the state initially retains 40 per cent of ownership to reduce financial burden, while buyers own 60 per cent. Once financially able, buyers can purchase the state’s share to fully own the home.

South Korea offers long-term rentals at 30-80 per cent of market prices, with community members eligible for 30-year low-interest loans (around 5.2 per cent) from the state budget, including a 30-year grace period. Social housing projects are located near employment centres with full utilities, emphasising infrastructure, environmental improvements, safety, and comfort standards, supported by long-term financing mechanisms.

Japan runs rental housing schemes for workers with simplified procedures. Notably, the government supports local governments in utilising vacant properties, millions of which are scattered across the country. These homes are often refurbished by the state and reintroduced to the market in partnership with non-governmental organisations, through subsidised loans or direct rental subsidies for low-income earners.

From a financial policy perspective, Vietnam could consider tax and fee incentives, land-use support, and shared ownership schemes in which the state initially holds 40 per cent of a unit’s value, while the buyer owns 60 per cent. Once the buyer becomes financially capable, they may purchase the remaining 40 per cent, thereby easing financial pressure.

International cooperation on low-interest financing could also be pursued. Additional mechanisms include accelerated depreciation and exemptions on housing sales after a certain holding period.

From a zoning perspective, Vietnam could allow higher density development near transport hubs and adopt zoning bonuses, such as increased floor area ratios, for developers who commit to building affordable units with restricted transferability. Legislation could require that 10–30 per cent of units in new developments be designated as affordable housing.

In terms of standards and design, Vietnam can adopt standard building templates to lower construction costs and permit small units of around 17 sq.m, similar to Japan. It’s also essential to control material and labour costs and address material shortages.

For construction and technology, lightweight structures, modular housing, and prefabrication methods should be considered to reduce costs.

From an administrative perspective, streamlining procedures, such as waiving construction permits and expediting approvals, will help. Rental prices could be regulated to remain at least 10 per cent below market rates. Developers of affordable housing projects could receive preferential treatment, such as scoring advantages when bidding for commercial projects. Inefficient commercial spaces, such as vacant office buildings or warehouses, could be repurposed as affordable housing.

The state could also take a more active role in establishing an affordable housing fund to support rental and rent-to-own models.

Despite growing demand for social housing, particularly in major cities like Ho Chi Minh City and Hanoi, the supply remains bottlenecked due to various regulatory, procedural, and policy barriers.

The Ministry of Construction has proposed a number of adjustments to social housing loan policies, including lower interest rates and longer loan tenures, following a joint proposal submitted by Vingroup and Techcombank.