Vietnam may push for more houses for rent

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The Ministry of Construction plans to introduce a new rule that requires residential developers to set aside at least 10 percent of their projects to build apartments for rent.

For major cities, including Hanoi, Ho Chi Minh City and Da Nang, the requirement will be 15 percent, according to a plan submitted to the prime minister last week. The rule is expected to be applied to housing projects that cover 10 hectares of land or more.

The ministry said the number of houses for lease in Vietnam is equal to only 6.3 percent of the number of home owners. Many of the rental homes are built by individuals who do not follow housing development criteria, it said.

Under the new plan, apartments for rent must have a floor area of at least 25 square meters.

Vietnam's Housing Law, which was introduced in 2005, already encourages real estate companies to build more apartments for lease instead of only investing in houses for sale. However, there is no obligation for them to do so. 

Construction Minister Trinh Dinh Dung admitted that government policies have so far focused on the development of rental housing projects for workers at industrial parks and students only. Now it is necessary to build more houses to meet the larger public demand, he said.

Developers who build houses to let will be eligible for tax incentives, he added.

The manager of a real estate company who requested anonymity said the new rule may not work because many developers are not interested in building rental houses.

He said that trying to squeeze in a separate section of rental properties on major housing projects wouldn't work and could even bring down the value of the whole project, he said.

If the rule comes into effect, property firms may avoid large projects of 10 hectares altogether, the manager said.

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