Hanoi Landlords Raise Housing Rents Amid Rising Inflation Pressures

In the bustling Khuong Dinh Ward of Hanoi, Thuy Ngan recently faced a tough decision: stay put or move. Her landlord had decided to raise the rent on her 20-square-meter apartment from VND3.8 million (US$144) to VND4.2 million, a 10% increase starting this September. “With inflation soaring, all prices are on the rise. Rent cannot remain untouched,” the landlord explained, echoing a sentiment felt by many in Vietnam’s rental market.

For Ngan, the struggles of rising living costs meant her total monthly expenses, including utilities, surged to nearly VND5 million, consuming a hefty third of her income. After weighing her options, she opted for a new apartment five kilometers away, where the rent was 10% lower, albeit with a longer commute.

A Shocked Tenant in Cau Giay

Quang Huy and his wife found themselves in a similar predicament in Cau Giay Ward. With their lease set to expire, they were blindsided when their rent shot up by 15% to VND9 million for a two-bedroom unit. “The landlord said the property had been freshly painted and renovated, which justified the hike,” Huy noted. The couple was bluntly informed that with students flocking to the area, any disagreement over rent would be met with indifference. After two weeks of searching for more affordable housing, they now contemplate a move to an older unit further from their current home.

Rising Rents Across the Board

Nguyen Tuan Anh, who operates a rental company managing 50 units in Hanoi, reveals that many landlords are raising rents by 10% to 15%. Inflation, increasing property prices, and bumps in furnishing costs are common justifications. According to the General Statistics Office, the consumer price index surged by 3.24% year-on-year last month, with household electricity prices climbing 10.8% and water costs up 3.9%.

Meanwhile, data from property portal Batdongsan indicates that rental demand in Hanoi rose by 11% in July alone. Since March, rents have been on a steady ascent, up 10% overall, with smaller units seeing hikes of up to 15%. Pham Duc Toan, CEO of property developer EZ Property, acknowledged that urban migration is contributing to robust rental demand in cities like Hanoi and Ho Chi Minh City, with 22% of respondents in a recent index citing better job opportunities as their reason for relocating.

Struggling to Keep Up

As rents continue to climb, landlords and investors are anticipating even higher returns, driven by the rise in property prices and general inflation. Toan emphasized, “When living costs and prices of goods and services increase, landlords are inclined to raise rents as well.” The September arrival of a new school year typically spurs a 20% to 30% increase in rental demand, coinciding with lease expirations, said Nguyen Chi Thanh, vice chairman of the Vietnam Association of Realtors.

However, as economic strains persist and salaries stagnate, many residents are forced to compromise. They are increasingly opting for smaller, less central, and more affordable living spaces to make ends meet. A survey conducted by VnExpress reveals that nearly 14% of respondents plan to leave Hanoi and return to their hometowns due to soaring housing costs.

Seeking Solutions

Experts suggest that enhancing social housing options could alleviate some of the rental pressures. Toan recommends increasing the supply of social housing through interest rate and tax incentives, alongside improved access to land for developers. After all, in a city where the rent is always too darn high, every little bit helps.