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Affordable housing is housing that is reasonably adequate in standard and location for a
lower or middle-income household and does not cost so much that such a household is
unlikely to be able to meet other basic living costs on a sustainable basis (National
Summit on Housing Affordability, 2006).
There are different definitions of affordable housing in various countries all over the
world. (Bakhtyar et al.,2012)
The United Kingdom has a long time experience promoting affordable housing, such as
the council-owned public housing [1] . It has also shared the ownership with social
landlords and different plans for decreasing the housing price for owners. Since 1980, the
conservative government of UK has launched and strictly supported a new plan under the
name Right to Buy for low-income people [1] .
Before the 1980s in the United States, subsidized housing (public and private) was
referred to as low-income housing and low- and moderate-income housing, with explicit
definitions of low income and moderate income. Although such terms and definitions
are still used in determining eligibility under various housing policies and programs in
this country, the term affordable housing came into vogue in the 1980s as part of the
retreat from public responsibility for the plight of the poor and as affordability challenges
moved up the income distribution.
Although it still lacks precise and consistent definition, the term has since achieved
international stature, and it typically encompasses not only social housing and lowincome housing, but also financially assisted housing for middle-income households that
find it difficult to purchase houses in the private speculative market.
Relativechanges in the relationship between summary measures of house prices or
costs and household incomes
Relative measures. The relative approach, used widely by the mortgage lending and real
estate industries to assess the affordability of the residential sales market, is based on
prototypical housing costs, primarily for potential home buyers. (Stone,2006).
In the United States, different affordable housing formulas and definitions are being
practiced in the country. One of the most common housing affordability calculations is
using the National Association Realtors (NAR). This formula can show the ability of
medium-income earners for the monthly payment of a house [9] . It states:
Monthly Payment = Median House Price x 0.8 x (R/12)/(1-(1/(1+R/12)^360))
Where R is the interest rate on loan, 0.8 is the conversion factor; assumption is the
income, % down payment and other constant factors.
According to the definition provided by the U.S. Department of Housing and Urban
Development (HUD), the housing costs that consume less than 30% of a households
budget is an affordable house [12]. It means that, each family has to allocate 70% of its
income to other needs, such as food, education, cultural needs, clothing and even leisure
time and entertainment. This definition of affordable housing assumes that a renters
household does not spend more than 30% of its income on housing costs, including
utilities. It means, if one family allocates less than 30% of its income including utilities
and taxes to the house rental, the house is affordable [13].
Australian Ministers of Housing, Planning and Local Government have agreed to adopt
the following definition of affordable housing to support state and local governments to
plan for and monitor the supply of affordable housing:
Affordable housing is housing that is appropriate for the needs of a range of low to
moderate income households and priced so that low and moderate incomes are able to
meet their other essential basic living costs .
PRWG (2006 in Milligan et al 2007, p26) state: Housing is appropriate for a household
if it: Is appropriate for that household in terms of size, quality, accessibility and location;
Is integrated within a reasonably diverse local community ; Does not incur unreasonable
costs relating to maintenance, utilities and transport; (and) Provides security of tenure and
cost for a reasonable period. "
Low to moderate income includes those households which have incomes below 120% of
the gross median income of all households.
Affordable housing may refer, in this case, to all housing for which the cost to the tenant
is not regulated strictly by the market, but which is made cheaper through some form of
government intervention. However, the term has also gained a more specific meaning
arising in response to the shrinking role of public housing and associated tightening of the
target public housing to those households with high, very acute and/or complex needs.
Research on housing affordability has established the existence of an extensive need for
social housing in addition to that met through the provision of public housing.
Defining affordable housing in India is a difficult task given that at every square
kilometer of the country, the dynamics of the market are different. At KPMG and
CREDAI, they have therefore broadly defined affordable housing in India for Tier I, II
and III cities based on three key parameters: Affordable housing can be defined using
three key parameters viz. income level, size of dwelling unit and affordability. While the
first two parameters are independent of each other, the third parameter is correlated to
income and property price, and hence can be termed a dependent parameter. While the
above definition is a generic representation at an all India level, the actual definition of
affordable housing may vary with regions and income levels. Another point to note is that
the definition of affordable housing is not just restricted to the three categories mentioned
above, but applies to people across the country. (KPMG,2010).
Defining affordable housing in Vietnam in this study base on Resolution No. 02/NQ-CP :
affordable housing includes commercial housing and social housing which housing with
area less than 70m2 and price bellow VND15 million/m2.
Why should the country develop affordable housing ?
Affordable Housing gets defined purely in terms of what households in different income
ranges can afford and housing is provided by the market within that price range
irrespective of the quality of housing. (Wadhwa,2009 )
The reason for high (unaffordable) price of housing in the market lies in:
(i) high land prices,
Exemption from VAT - 5%; CIT - 10% (compared to the common VAT - 10%; CIT - 20%
to 25%)
Preferential loans or interest rate support: At present, social housing projects are
benefiting from the lending support package valued at VND 30,000 billion (Resolution
No. 02/NQ-CP)
6%/year in 10 years (secured at 12 commercial interest rate);
30% of the package is lent to businesses, 70% is lent to buyers;
Loans are provided to commercial house purchase with area less than 70 m2 and
price bellow VND15 million/m2
Support for 100% investment in infrastructure inside the barrier fence and a portion of
investment in infrastructure outside the fence.
20% of the land and house fund issued for business purposes
Houses formed in the future by the projects are used as collaterals for mortgage loans ;
housing costs are accounted as production costs.
The rent is sufficient for capital recovery, excluding land use charges, land rent and tax
incentives required by the State.
Consumers of social houses must pay 20% in advance and pay the remaining by
amortization in 15-20 years.
Officers and employees, who are transferred or circulated by work request, are entitled to
leasing public houses.
Contributors to the Revolution, poor households in rural and mountainous areas are
supported by the State, economic organizations, social organizations and community in
housing.
The development and management of affordable housing /social houses:
Form: low-rise apartment/townhouse complexes, in which apartment area/townhouse
area is less than 70 m2.
Those entitled to purchase, rent and lease belong to 8 groups
Preferential loans or interest rate support: At present, social housing projects are
benefiting from the lending support package valued at VND 30,000 billion (Resolution
No. 02/NQ-CP)
Interest rate is 6%/year in 10 years (secured at 12 commercial interest rate);
30% of the package is lent to businesses, 70% is lent to buyers;
Loans are provided to commercial house purchase with area less than 70m2 and price
bellow VND15 million/m2.
Support for 100% investment in infrastructure inside the barrier fence and a portion of
investment in infrastructure outside the fence.
20% of the land and house fund is used for business purposes
Houses formed in the future by the projects are used as collaterals for mortgage loans;
housing costs are accounted as production costs.
In 2011, the Prime Minister issued the National Housing Development Strategy up to
2020, with a vision to 2030 with fundamental substances as followed:
Define role of the State in housing.
As such, total demand from now to 2020 is about 17.28 million m2, equivalent to
432,000 apartments.
(4)
28,200,000
Increase
by
2013-2015
(5)
6,600,000
Increase
by
2016-2020
(6)
8,400,000
(7)
43,200,000
head
1,410,000
330,000
420,000
2,160,000
m2
apart
ment
11,280,000
2,640,000
3,360,000
17,280,000
282,000
66,000
84,000
432,000
No.
Social houses
Unit
By now
(1)
(2)
Urban population
People having
housing
difficulties
(3)
head
Housing demand
Total by
2020
No.
Social houses
Unit
By now
(1)
(2)
Number of workers
seeking for a
housing shelter
(3)
(4)
Increase
by
2013-2015
(5)
head
1,400,000
315,000
637,000
2,352,000
8,400,000
1,890,000
3,822,000
14,112,000
280,000
63,000
127.400
470.400
Housing demand
m2
Apart
ment
Increase
by
2016-2020
(6)
Total by
2020
(7)
No.
Social houses
Unit
By now
(1)
(2)
Number of workers
seeking for a
housing shelter
(3)
(4)
Increase
by
2013-2015
(5)
head
1,400,000
315,000
637,000
2,352,000
8,400,000
1,890,000
3,822,000
14,112,000
127.400
470.400
Housing demand
m2
Apart
280,000
63,000
ment
Department of Housing Management
and Real Estate Market
Increase
by
2016-2020
(6)
Total by
2020
(7)
- Developers had to borrow at interest rate of commercial loans which is very high for
the construction of houses (in the period of 2009-2012, interest rate was up to 20-25
%/year).
Housing price index /income in Vietnam in the last stage was 24.5 to 26.6 . This index is
much higher than other countries in the region and around the world (South Asian :6.25 ;
East Asia :4.14 ; Africa :2.21 ; Europe and the Middle East :6.25 ...)
- Housing speculation occurs leading to house prices being pushed up.
- Rate of public housing in urban areas across the country is still very low.
- Project housing development, new urban development areas are mostly small-scale
(less than 20 ha).
- Housing finance system lacks synchronization, medium and long term loans.
- The period from 2011 till now: The housing market has been less active, high- end
residential products and large-scale apartments are not sold which increase the level of
inventory.
- Lack of small sized houses that are suitable for low-income peoples demand.
In order to qualify for a housing subsidy, consumer needs to have the following:
Consumer has to be a Vietnamese citizen;
Consumer must be over 18 years of age;
Consumer must have a total household income of less than 450 USD per month;
(income without tax )
Priority for consumer who got married or lived with a partner or was single and
has dependents (children you are responsible for);
Consumer must never have owned a house or a property anywhere in Vietnam.
Consumer has never gotten housing subsidy before.
It is very important to warn people who want to apply for a housing subsidy of the
following:
They can only get one housing subsidy (except for consolidation subsidy) so they must
use it wisely;
The names of both partners go on the database. If you split up with your partner you will
not get another subsidy with your new partner.