Joint Circular No. 72/2002/TTLT/BTC-BXD-NHNN guiding the implementation of policies for households in flood-prone areas to purchase on credit land plots and houses in residential clusters in the Mekong Delta.

JOINT CIRCULAR
Guidelines for implementing policies for households in flood-prone areas to purchase houses and land plots on installment in residential clusters and lines
purchasing on credit for land plots and houses in residential clusters and zones
in the Mekong Delta

Pursuant to Decisions of the Prime Minister No. 173/2001/QĐ-TTg dated November 6, 2001 on economic and social development in the Mekong Delta region for the period 2001-2005; No. 1548/QĐ-TTg dated December 5, 2001 on investment in raising land levels above flood waters to build residential clusters and lines in flood-prone areas in the Mekong Delta in 2002; No. 105/2002/QĐ-TTg dated August 2, 2002 on policies for households in flood-prone areas to purchase land plots and houses on installment in residential clusters and lines in provinces of the Mekong Delta;
The Ministry of Finance, Ministry of Construction, and the State Bank of Vietnam hereby issue guidelines for implementing policies for households in flood-prone areas to purchase land plots and houses on installment in residential clusters and lines in the Mekong Delta at seven provinces including An Giang, Dong Thap, Long An, Vinh Long, Kien Giang, Tien Giang, and Can Tho as follows:

Part A:

GENERAL PROVISIONS

1. The Circular applies to households permanently residing in frequently flooded areas within the aforementioned seven provinces who need to relocate to residential clusters according to approved planning and have a desire to purchase land plots and houses on installment. Priority will be given to poor households, policy-targeted households, and households whose land must be reclaimed for construction of residential clusters.

2. Sources of investment funding

2.1. Sources of capital for elevating land plots for sale on installment to households in residential clusters and lines in the Mekong Delta at the seven provinces include: central government budget funds accounting for 50% of total investment capital, with the remaining 50% raised by the Development Support Fund.

2.2. Sources of capital for constructing houses for sale on installment to households include: central government budget funds accounting for 50% of total investment capital needs, with the remaining 50% raised by the Poverty Alleviation Bank.

3. Households eligible to purchase land plots and houses on installment as stipulated in Point 1 of Part A of this Circular (referred to as eligible households) shall not be required to mortgage assets when purchasing on installment. The State encourages eligible households to repay their debts early.

4. Within ten years from the date of purchasing land plots and houses on installment, eligible households may not sell, pledge, or transfer them.

5. For households that previously borrowed funds under Decision No. 256/TTg dated April 24, 1996 of the Prime Minister regarding loans for households in the Mekong Delta region to elevate land or construct houses on piles but have yet to fully repay their debts, they must commit to repaying old debts within five years from the date of purchasing land and houses on installment under this Circular.

Part B:

SPECIFIC PROVISIONS

I. REGARDING THE PURCHASE OF LAND PLOTS ON INSTALLMENT

1. Conditions for purchasing land plots on installment

Eligible households may purchase one (1) land plot on installment if they meet all of the following conditions:

1.1. Permanent residency in the locality;

1.2. Submission of an application to purchase a land plot on installment, commitment to use it for its intended purpose, and repayment of the purchase price on time;

1.3. Being listed in the approved list of households eligible to purchase land plots on installment by the People's Committee.

2. Price of land plots, interest rate, installment period, and procedures for purchase

2.1. The price of land plots is determined using the following method:

Where:

- The average price of 1 square meter of land in the cluster (or line)

- The area of the land plot allocated to households is determined by the provincial People's Committee based on local circumstances, available funding, and residents' ability to pay.

2.2. Eligible households meeting the conditions specified in Point 1 of Section I of Part B of this Circular may purchase one (1) land plot on installment with a maximum value of 10 million VND. If the actual price of the land plot is lower than 10 million VND, it can be purchased on installment at the actual price. If the actual price exceeds 10 million VND, the household must pay the excess amount after signing the land plot purchase contract.

2.3. The interest rate for purchasing land plots on installment is 0% (zero percent).

2.4. The maximum term for paying off the installment purchase of a land plot is ten years from the date of purchase, with the first five years being grace periods (no principal repayment). Repayment begins in the sixth year after purchase, with a minimum annual payment of 20% of the total installment amount.

2.5. After completing the elevation of the land plot, the People's Committee (at the district or commune level as specified by the provincial People's Committee) calculates the value of each land plot, issues a decision, and organizes the allocation of land plots to households, signs a promissory note for the installment purchase of land plots with each household according to Points 2.1, 2.2, 2.3, and 2.4 of Section I of Part B of this Circular, and collects the installment payments from each household upon maturity to repay the Development Support Fund.

(Model Promissory Note for Installment Purchase of Land Plots as Annex No. 01).

3. The central government transfers funds to the Development Support Fund for a loan of 50% of the total investment capital for elevating land plots at zero percent (zero percent) interest, with the remaining 50% raised by the Development Support Fund. (Model of the Deferred Payment Land Purchase Contract according to Appendix No. 01).

3. The central government budget transfers capital to the Development Support Fund by providing a loan of 50% of the total investment capital for land plot development at an interest rate of 0%, with the remaining 50% to be raised by the Development Support Fund.

4. The borrowing and repayment of funds from the Development Support Fund for investment in housing foundations for households shall be carried out in accordance with Circular No. 39/2002/TT-BTC dated April 26, 2002, issued by the Ministry of Finance, guiding the management and settlement of state budget capital, state development credit capital, and other sources of mobilization to build clusters and residential lines in the Mekong Delta, and Circular No. 54/2002/TT-BTC dated June 25, 2002, issued by the Ministry of Finance, supplementing and amending certain points of Circular No. 39/2002/TT-BTC.

5. The Development Support Fund shall be compensated by the Central Budget for the interest rate differential and management fees at a rate of 0.5% per year on the outstanding balance (the provision regarding the management fee for the Development Support Fund in this Circular replaces Point 6, Section I, Part II of Circular No. 39/2002/TT-BTC dated April 26, 2002, issued by the Ministry of Finance).

II. REGARDING THE PURCHASE OF HOUSING ON INSTALLMENTS

1. Conditions for purchasing housing on installments

Households falling within the prescribed categories may purchase one (1) house on installment if they meet all of the following conditions:

1.1. Submitting an application to purchase housing on installment, committing to use it for its intended purpose, and paying the purchase price according to schedule;

1.2. Having received a decision on the allocation of the housing foundation from the competent authority;

1.3. Being included in the list of eligible households for purchasing housing on installment approved by the People's Committee.

2. Purchase price on installments, interest rate, installment period, and procedures for purchase:

2.1. Households falling within the prescribed categories and meeting the above conditions may purchase one (1) house on installment with a maximum value of seven million dong. If the actual price of the house is lower than seven million dong, the household may purchase it at the actual price; if the actual price is higher than seven million dong, the household must pay the difference after signing the housing purchase contract.

2.2. The interest rate for purchasing housing on installment is three percent (3%) per annum, applicable throughout the installment period including the first five years of grace period. In case the household fails to repay the loan on time, the bank will not grant an extension, and the loan will become overdue, subject to the overdue interest rate as stipulated by the Poverty Alleviation Bank.

2.3. The maximum term for repaying the installment purchase of housing is ten years from the date of purchase, including a grace period of five years (no principal and interest payments during the first five years). Repayment of the installment purchase of housing begins in the sixth year, with a minimum annual payment equal to twenty percent (20%) of the total interest and principal due.

2.4. Based on the list of eligible households for purchasing housing on installment, the People's Committee (at district or commune level as specified by the provincial People's Committee) shall organize the signing of construction contracts, installment payments, and the components include:

- The People's Committee;

- The household purchasing the house;

- The construction enterprise building houses for residents.

The contract shall include key contents such as: house model, area, house price, amount payable under the installment purchase of housing as stipulated in Points 2.1, 2.2, and 2.3 of Section II, Part B of this Circular, additional amount payable by the household (if any), and payment conditions.

2.5. After the house is completed, the People's Committee (at district or commune level as specified by the provincial People's Committee) shall organize the handover of the house to each household, with the handover components including:

- The People's Committee;

- The household receiving the house;

- The construction enterprise building houses for residents.

2.6. Simultaneously with the handover of the house, based on the handover record, each household shall sign a promissory note for purchasing housing on installment with the Poverty Alleviation Bank or the entrusted bank for lending and debt recovery (entrusted bank). (Model of the promissory note for borrowing money to purchase housing on installment as per Appendix No. 02).

2.7. Documents for purchasing housing on installment include::

- Handover record of the house;

- Decision of the People's Committee approving the household's purchase of housing on installment (a copy);

- Promissory note for borrowing money to purchase housing on installment.

Clause 2.8. Method of transferring the loan:

Based on the documents for purchasing housing on installment, the Poverty Alleviation Bank or the entrusted bank shall transfer the money directly to the construction enterprise producing the house at the actual selling price but not exceeding seven million dong.

3. The Central Budget shall transfer capital to the Poverty Alleviation Bank for lending at fifty percent (50%) of the total investment capital for selling housing on installment to residents with an interest rate of zero percent (0%), while the remaining fifty percent (50%) shall be raised by the Poverty Alleviation Bank.

4. The Poverty Alleviation Bank shall implement the policy of selling housing on installment to households, which shall be compensated by the State for the interest rate differential and management fees at a rate of one percent (1%) per year on the outstanding balance.

III. INCENTIVE POLICY FOR HOUSEHOLDS REPAYING DEBTS EARLY:

The principle of encouraging households to repay debts early is to reduce the amount payable corresponding to the interest rate differential and management fees that the State must compensate for the Development Support Fund or the Poverty Alleviation Bank.

The amount reduced for households repaying early is determined by the following formula:

Based on the actual number of years households repay early, the People's Committee (at district or commune level as specified by the provincial People's Committee) and the Poverty Alleviation Bank or the entrusted bank shall calculate the reduction in the amount payable for each household, and the households only need to pay the difference between the amount borrowed on installment and the incentive amount due to early repayment as mentioned above.

Example 1: Mr. Nguyen Van A's family (headed by Mr. A) signed a promissory note to purchase a housing foundation on installment at a rate of eight million dong (trillion dong), and Mr. A repaid early.

- Case 1: If repaid three years early

Amount reduced = 8 trillion dong x 4% x 3 years = 0.96 trillion dong.

The amount Mr. A's family still needs to pay = 8 trillion dong - 0.96 trillion dong = 7.04 trillion dong

- Case 2:

If repaid seven years early: Amount reduced = 8 trillion dong x 4% x 7 years = 2.24 trillion dong

Mr. A still needs to pay = 8 trillion dong - 2.24 trillion dong = 5.76 trillion dong.

The amount Mr. A's family still needs to pay = 8 trillion dong - 0.96 trillion dong = 7.04 trillion dong

Mr. Nguyen Van A's family (headed by Mr. A) signed a promissory note to purchase housing on installment at a rate of seven million dong, and Mr. A repaid early.

Example 2: If repaid three years early:

- Case 1: Interest generated in

for seven years (before reduction) = 7 million dong + 1.47 million dong = 8.47 million dong

Amount reduced = 7 million dong x 4% x 3 years = 0.84 million dong

Mr. A still needs to pay = 8.47 million dong - 0.84 million dong = 7.63 million dong

The amount Mr. A's family still needs to pay = 8 trillion dong - 0.96 trillion dong = 7.04 trillion dong

Interest generated in three years = 7 million dong x 3% per year x 3 years = 0.63 million dong

If repaid seven years early: Amount reduced = 8 trillion dong x 4% x 7 years = 2.24 trillion dong

Total amount payable calculated for

Mr. A still needs to pay = 7.63 million dong - 1.96 million dong = 5.67 million dong

The amount Mr. A's family still needs to pay = 8 trillion dong - 0.96 trillion dong = 7.04 trillion dong

IV. CASES WHERE HOUSEHOLDS ARE SUPPORTED FROM OTHER SOURCES OF FUNDS

1. Households that have been supported with housing foundations and/or houses in residential clusters according to planning from other sources of funds shall not be eligible to purchase housing foundations and/or houses on installment as guided by this Circular.

1. Households that have already received support in the form of land plots and/or houses in residential clusters and zones according to planning from other sources of capital shall not purchase land plots and/or houses on credit in accordance with the guidelines set forth in this Circular.

2. Households purchasing land plots and houses according to the guidelines set forth in this Circular, if they receive partial capital support for land plot construction and/or house construction from other sources, shall have the People's Committee and the Poverty Reduction Service Bank or entrusted bank cooperate with supporting agencies to immediately recover the deferred payment amount as follows:

- If the supported amount is less than the deferred payment amount for the land plot and house purchase, the recovery amount will be equal to the supported amount and the deferred payment amount under the agreement will be correspondingly reduced.

- If the supported amount is greater than or equal to the total deferred payment amount (principal and interest) for the land plot and house purchase, the recovery amount will be equal to the deferred payment amount and the deferred payment purchase agreement will be terminated.

- If the supported amount is greater than or equal to the remaining deferred payment amount (principal and interest) for the land plot and house purchase, the recovery amount will be equal to the remaining deferred payment amount and the deferred payment purchase agreement will be terminated.

The reduction in debt corresponding to the support amount provided by supporting organizations and units shall not enjoy early repayment incentives as stipulated in Section III Part B of this Circular.

V. IMPLEMENTATION ORGANIZATION AND RESPONSIBILITIES OF THE INVOLVED PARTIES

1. Investment procedures for land elevation projects in clusters and residential areas

Land elevation projects for clusters and residential areas in flood-prone areas in the Mekong Delta in 2002, as decided in Decision No. 1548/QD-TTg dated December 5, 2001 on investment in land elevation above flood levels to construct clusters and residential areas in flood-prone areas in the Mekong Delta in 2002, Decision No. 216/2002/QD-TTg dated March 25, 2002 on additional funding for 2002, and Decision No. 105/2002/QD-TTg dated August 2, 2002 on policies for households in flood-prone areas to purchase land plots and houses on deferred payment terms in clusters and residential areas in the Mekong Delta provinces, shall be managed as follows:

- The investment capital allocated in the aforementioned decisions shall be used to invest in land elevation projects for clusters and residential areas in flood-prone areas in the Mekong Delta until completion and put into use, without being limited by fiscal year, and shall not be reallocated for other purposes;

- Projects that have been approved by competent authorities for planning do not need to prepare and submit a Preliminary Feasibility Study Report, Feasibility Study Report, but only need to prepare and submit a Technical Design and Construction Estimate;

- These projects are permitted to directly assign contracts.

2. Responsibilities of the involved parties

2.1. For local People's Committees at all levels

a/ Provincial People's Committee:

- Shall be responsible for managing and using investment capital for land elevation and coordinating with the Poverty Reduction Service Bank or entrusted bank to ensure the proper and effective use of funds. The central budget allocation for each province according to Decision No. 216/2002/QD-TTg dated March 25, 2002 of the Prime Minister, the loan limit from the Development Support Fund for land elevation, and the loan limit of the Poverty Reduction Service Bank or entrusted bank are the maximum limits;

- To specify and publicly announce detailed standards and eligible groups for purchasing land plots and houses on deferred payment terms in accordance with each area, ensuring fairness and reasonableness; to direct the preparation and review of lists of eligible groups for purchasing land plots and houses on deferred payment terms;

- To approve the overall list of households purchasing land plots and houses on deferred payment terms throughout the province based on the proposal of the district People's Committee; to stipulate for the provincial or district People's Committee to approve specific lists within the district;

- To direct the implementation of loans from the Development Support Fund for land elevation, organize the transfer of land plots and sign agreements, recover or entrust suitable banks to sign agreements and recover deferred payments from each household in accordance with legal regulations to repay the Development Support Fund, and cover any agency fees (if applicable) from the local budget;

- To direct the ordering of prefabricated components and housing construction from enterprises for households; to direct the implementation of housing construction; to coordinate with the Poverty Reduction Service Bank or entrusted bank to implement loans for households to purchase houses on deferred payment terms.

b/ District and commune People's Committees (as specified by the provincial People's Committee) shall fulfill all tasks assigned by the provincial People's Committee and in accordance with the guidelines of this Circular.

2.2. Households purchasing land plots and houses on deferred payment terms:

a/ Submit an application to purchase land plots and houses on deferred payment terms;

b/ Use the land plots and houses in accordance with this Circular and relevant laws;

c/ Fulfill timely debt repayment, and in cases of early repayment, enjoy incentive policies as stipulated in Section III Part B of this Circular.

2.3. The Poverty Reduction Service Bank and the Vietnam Agricultural and Rural Development Bank:

a/ The Poverty Reduction Service Bank organizes the receipt of capital from the state budget and mobilizes capital to entrust the Vietnam Agricultural and Rural Development Bank to implement loans and collect debts for deferred payment house purchases by individual households;

b/ The Vietnam Agricultural and Rural Development Bank is responsible for arranging sufficient staff and transaction networks in clusters and residential areas to effectively perform the entrusted tasks;

c/ Pay money to enterprises producing houses;

d/ The Poverty Reduction Service Bank and the entrusted bank open appropriate accounts in accordance with current regulations of the State Bank of Vietnam to record and monitor the central government budget transferred funds and funds raised for deferred payment house purchase loans for households;

e/ On the 5th of each month, the Poverty Reduction Service Bank sends a report to the State Bank of Vietnam (Credit Department) about the results of deferred payment house purchase loans according to the model prescribed in this Circular (Reporting form according to Appendix No. 03).

2.4- Development Support Fund:

Shall be responsible for signing loan contracts with localities, transferring funds and recovering debts according to signed contracts (as guided in Circular No. 39/2002/TT-BTC dated April 26, 2002 and Circular No. 54/2002/TT-BTC dated June 25, 2002 of the Ministry of Finance).

2.5. Enterprises producing prefabricated components and constructing houses for residents:

Enterprises must produce sufficient prefabricated components and construct houses for residents at reasonable production costs and selling prices, ensuring that enterprises do not incur losses but also do not charge interest when selling houses to residents. Enterprises should produce several house models for residents to choose from according to their usage requirements.

PART C. IMPLEMENTATION PROVISIONS

This Circular takes effect from the date of issuance.