A Vietnamese saying has it that “when the place of residence is stable, business can develop.” It speaks of the special place housing has in the Vietnamese psyche. Demand for housing is huge, but for people on low or middle incomes the cost puts the dream out of reach. 

Finding a solution to help the majority of people in large cities to own a house was a concern of Mr Bui Huy Tuan, Head of the Credit Department at the Central Credit Fund. The solution, he believes, is housing co-operatives. 

Capital from members is contributed to the cooperative based on how much they can afford. The capital represents a certain number of square metres of floor space in a standard apartment according to the market price at the time of contribution. “Each member, on their own, can’t afford to buy an apartment, but it can be done with contributions from many members,” Mr Tuan said. If the total amount contributed by members is not enough to buy a standard apartment, it will be deposited in a bank for an appropriate term and earn revenue via interest payments. When the capital is enough to buy a standard apartment, one is bought immediately.

The operation of the cooperative is financed by rents. “The money from rents is the main source of income covering the costs of the cooperative’s activities,” Mr Tuan explained. “After deducting expenses each year, the remainder goes to purchasing more apartments. Floor space paid for is divided among members, like a common dividend.” 

Mr Tuan believes that the housing cooperative model will bring a range of benefits to society. It can act as a savings tool, helping people become aware about savings to buy an apartment and it will preserve the value of their capital.

Moreover, it will help increase the housing fund within society and provide buyers for real estate companies. “The model will create the conditions for millions of people to be able to own their own houses and will change the living conditions of large part of the population in big cities,” Mr Tuan said.