Outline:
International Approaches to Affordable Housing
Across the globe, various countries have implemented unique strategies to address the challenge of affordable housing. These approaches often involve a combination of policy measures, financial incentives, and innovative construction techniques.
In the European Union, cross-border coordination plays a significant role in supporting member states. The collective strength of the bloc allows for shared resources and expertise. Germany, for instance, promotes public-private partnerships and implements policies to control energy prices and protect tenants. France has introduced a requirement that 20% of the total area in urban development projects be reserved for affordable housing, applying to both individual buildings and entire neighborhoods.
The United Kingdom focuses on rental price control to ensure that rent increases remain moderate. Meanwhile, Finland prioritizes first-time buyers and vulnerable groups by offering rent subsidies, mandating developers to include low-cost units, and providing long-term financial support specifically for low-income households.
In the United States, the emphasis is on building and maintaining rental housing for low-income families. The private sector is encouraged through tax incentives and bonus systems for developers who construct social housing. Developers may also increase building density if their projects include affordable units.
Support measures across different regions often include direct and indirect rental subsidies, mandates to increase the supply of affordable housing in new developments, flexible local policies, and housing combined with homeless support services. Expanding affordable housing options with integrated services is another common approach.
Canada has launched several initiatives aimed at increasing federal tax funding and removing financial barriers. The country creates institutional mechanisms that reward provinces with strong housing initiatives by allocating more state funding. This encourages localities to accelerate permitting processes, diversify direct support for vulnerable groups, and reduce energy costs.
China has supported households earning between $4,200 and $9,700 per year in purchasing homes of 60-110 sq.m at just 50-70% of market prices since 1998. A popular initiative is shared ownership, where the state initially retains 40% of ownership to reduce financial burden, while buyers own 60%. Once financially able, buyers can purchase the state’s share to fully own the home.
South Korea offers long-term rentals at 30-80% of market prices, with community members eligible for 30-year low-interest loans (around 5.2%) from the state budget, including a 30-year grace period. Social housing projects are located near employment centers with full utilities, emphasizing 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 utilizing 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 organizations, through subsidized loans or direct rental subsidies for low-income earners.
Lessons for Vietnam
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% of a unit’s value, while the buyer owns 60%. Once the buyer becomes financially capable, they may purchase the remaining 40%, 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% 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% 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.