Incentives for Social Housing Investment Enterprises

Incentives for Social Housing Investment Enterprises are a matter of special interest to investors before making investment decisions. The current policy system has established a synchronous and favorable support mechanism, helping enterprises access land funds, capital sources, and financial incentives clearly and transparently. The following article by Long Phan Consulting Company will analyze this system of specific benefits in detail.

Land incentives for businesses investing in social housing

Land policy is a crucial factor in attracting businesses to participate in developing the social housing segment. Regulations on tax and fee incentives not only help lower product costs but also shorten the capital recovery time for businesses.

According to Point a, Clause 2, Article 85 of the Housing Law 2023, the investor is exempted from land use fees and land rent for the entire land area of the project. Notably, the investor does not have to perform procedures to determine land prices or calculate the exempted land use fees/rent. Furthermore, the investor does not have to perform procedures to request exemption from land use fees/rent, except for cases where the project has a commercial business area.

For the 20% land fund in commercial housing projects set aside for social housing construction, Article 24 of Decree 100/2024/ND-CP stipulates that when businesses fulfill the obligation to build social housing on this land fund, they still enjoy corresponding preferential mechanisms. In cases where businesses agree to receive the transfer of land use rights to implement social housing projects, the State will have a mechanism to support or deduct compensation and site clearance costs from financial obligations (if any) for the commercial business area.

>>> See more: Income Conditions for Beneficiaries of Social Housing Policies

Tax incentives and financial obligations

The tax incentive mechanism is designed to increase the actual profit margin for businesses, ensuring financial feasibility. Regulations on Value Added Tax (VAT) and Corporate Income Tax (CIT) are applied flexibly based on the characteristics of social housing projects. Independent accounting of revenue streams is a mandatory requirement to fully enjoy these incentives.

Based on Point b, Clause 2, Article 85 of the Housing Law 2023, businesses enjoy incentives regarding VAT and CIT according to tax laws. Specifically:

• VAT: Based on Point n, Clause 2, Article 9 of the Value Added Tax Law 2024, the VAT rate for selling, leasing, or lease-purchasing social housing is usually 5%.
• CIT: Based on Point b, Clause 2, Article 13 and Point s, Clause 2, Article 12 of the Corporate Income Tax Law 2025, businesses enjoy a preferential tax rate (usually 10%) for income from social housing investment and business activities. This helps optimize cash flow and increase the reinvestment capacity of the enterprise.

Regarding standard profit, Article 22 of Decree 100/2024/ND-CP stipulates that the investor’s maximum profit is equal to 10% of the total investment cost for the social housing area. This total cost includes construction costs, compensation costs, resettlement support, loan interest, and other reasonable costs (sales organization, business management – 2% norm). Clearly defining the profit ceiling helps businesses have a solid legal basis when developing selling price plans to submit to state agencies for appraisal.

>>> See more: Exemption from Land Use Levy when Selling Social Housing

Preferential treatment regarding credit, capital, and financial support

According to Clauses 2 and 3, Article 25 of Decree 100/2024/ND-CP, investors of social housing projects not using public investment capital can borrow preferential capital from the Vietnam Bank for Social Policies or credit institutions.

• Maximum Loan Capital: Up to 70% of the total investment (for sale/lease-purchase projects) and 80% (for lease-only projects).
• Loan Term: Flexible, maximum 10 years for housing for sale, 15 years for lease-purchase housing, and up to 20 years for lease-only housing (from the first disbursement date).

Preferential Interest Rates: Based on Clause 4, Article 25 of Decree 100/2024/ND-CP, the lending interest rate for sale/lease-purchase projects at the Vietnam Bank for Social Policies equals 120% of the lending interest rate for social housing buyers. For lease-only projects, this interest rate equals the lending interest rate for buyers. This mechanism reduces the pressure of interest costs in the price structure, helping businesses maintain stable cash flow throughout the project lifecycle.

Incentives in investment, construction, and business procedures

Standardized procedures help remove administrative barriers. Under Article 84 of the Housing Law 2023 and Articles 20 and 21 of Decree 100/2024/ND-CP, the investor selection process is streamlined.

• If only 01 investor is interested: The competent authority approves the investor if financial capacity is met.
• If 02 or more investors: Selection via bidding with a clear scoring scale, where the criteria for lower selling/rental prices account for a large proportion (40-50% of total points).

Additionally, the Provincial People’s Committee supports the connection of the project’s technical infrastructure system with the surrounding area. Businesses are also exempted from land price appraisal procedures when calculating land use fees, shortening project preparation time by 6-12 months compared to commercial projects.

Incentives in business operations and project development

The business mechanism allows enterprises to offset profits by exploiting commercial areas. Point d, Clause 2, Article 85 of the Housing Law 2023 and Article 23 of Decree 100/2024/ND-CP allow investors to reserve a maximum of 20% of the total residential land area in the project to invest in building service, commercial, and commercial housing works.

Importantly, the investor can account separately and enjoy the entire profit for this commercial business area. This profit is not calculated into the 10% standard profit of the social housing part, nor is it calculated into the cost of social housing.

Investors of social housing projects for lease can sell this housing under the market mechanism after 10 years from the date of acceptance and putting into use.

Be aware of the legal obligations and restrictions associated with these offers

Rights always come with obligations.

• Deposit/Guarantee: According to Clause 6, Article 84 of the Housing Law 2023, investors must make a deposit or have a bank guarantee to ensure project implementation.
• Quality: Social housing quality must be equivalent to commercial housing of the same type and comply with National Technical Regulations.
• Reporting: Reporting obligations and subjection to inspection are frequent. Determining construction investment costs to calculate selling prices must be accurate and reasonable. Violations (profiteering, false cost declarations, selling to wrong subjects) can lead to the revocation of incentives and project withdrawal.

Long Phan Consulting Company advisory service on incentives for social housing investment enterprises

In the complex legal landscape of the social housing sector, the support of a professional consulting firm is crucial for businesses to optimize incentives and minimize risks. Long Phan Consulting Company provides comprehensive solutions from the investment approval stage to operation and exploitation. We are committed to delivering practical value based on our in-depth understanding of the Housing Law and its guiding documents.

• Investment procedure consulting: Assisting businesses in preparing company profiles, bidding documents for investor selection, and carrying out procedures for investment policy approval and land allocation/leasing.
• Financial and tax consulting: Developing sales and rental pricing plans for submission to government agencies for approval; advising on cost accounting to optimize profit margins and tax incentives.
• Risk management consulting: Reviewing sales and lease agreements; ensuring compliance with regulations regarding customer profiles; representing businesses in dealings with inspection and auditing agencies.

Frequently Asked Questions About Incentives for Social Housing Investment Enterprises

Below, Long Phan Consulting Company provides some frequently asked questions regarding the incentives for social housing investment enterprises. We invite interested clients to refer to this information:

Are developers exempt from land use fees when changing the land use purpose to build social housing?

Yes. The investor is exempt from land use fees and land lease fees for the entire land area of ​​the project for which the investment policy has been approved, including cases where the land use purpose is legally changed to social housing, without having to go through the procedure of calculating land prices or requesting exemption.

Legal basis: Point a, Clause 2, Article 85 of the Housing Law 2023.

Do businesses have to go through the land valuation procedure to be exempt from land use fees?

No. The 2023 Housing Law clearly stipulates that investors are not required to carry out procedures for determining land prices, calculating land use fees, or applying for exemption from land use fees, and are not required to apply for exemption from land use fees.

Legal basis: Point a, Clause 2, Article 85 of the Housing Law 2023.

Will the profit from the commercial business area (20%) be included in the project’s 10% profit margin?

No. The investor is accounted for separately and receives all profits from the area used for commercial and service purposes. This profit is not included in the maximum 10% profit margin for the social housing area and is not included in the cost of social housing.

Legal basis: Point d, Clause 2, Article 85 of the Housing Law 2023; Clause 1, Article 23 of Decree 100/2024/ND-CP.

Are interest payments during the construction period included in the total investment cost when determining the selling price?

Yes. Interest expenses (if any) are included in the total investment cost for the construction of the social housing area, but do not include interest during the construction period that has already been determined in the project’s construction investment cost (to avoid double counting).

Legal basis: Point b, Clause 2, Article 22 of Decree 100/2024/ND-CP.

After how long can the developer sell social housing for rent under market mechanisms?

Developers of social housing projects for rent are allowed to sell these units at market prices 10 years after the project is completed and put into use, provided the project conforms to planning regulations and complies with land laws, after paying land use fees.

Legal basis: Clause 9, Article 88 of the Housing Law 2023.

Conclusion

Incentives for social housing investment enterprises are now much more open and practical. However, to realize benefits regarding land, tax, and loans, investors need to deeply understand the process and strictly comply with legal conditions.

Long Phan Consulting Company is ready to accompany clients. Please contact us via Hotline 1900636389 for timely and professional support.