The Ministry of Land, Infrastructure and Transport (MOLIT) will fully implement its "May 22 Supply Supplementary Measures" starting the 20th, raising land acquisition support for private developers to up to 80% of land costs to promote the supply of non-apartment housing such as officetels and urban-type living units.
The measures focus on lowering the burden on private developers participating in the purchase-rental housing program and accelerating project speed. The ministry had earlier announced in May a package built on three pillars: minimizing initial funding burdens, easing purchase standards, and enabling early construction starts.
First, support for initial project costs will be significantly strengthened. Starting that day, the land acquisition support that the Korea Land and Housing Corporation (LH) provides to developers will be raised from the current maximum of 70% of land costs to 80%. The Korea Housing and Urban Guarantee Corporation (HUG) will strengthen its project financing (PF) loan guarantee support. It will guarantee 10% of land costs and also guarantee initial project costs within a limit of 20% of land costs. Construction costs, which were previously paid in two portions—after framework construction and at completion—will now be paid according to progress rates in three-month intervals to ease funding burdens.
As a result, the initial project cost burden that developers must secure will be lowered to about 10% of land costs. This represents a significant easing compared with the previous 30% burden. The measures will be applied retroactively to cases already submitted this year. The ministry expects the changes to encourage the entry of private developers who had been unable to participate due to funding burdens.
Purchase standards will also be eased, allowing partial-purchase methods rather than whole-building units. The minimum purchase standard within regulated areas will also be eased from 19 units in Seoul and 50 units in Gyeonggi to at least 10 units in both Seoul and Gyeonggi. The measures will apply immediately to purchase-rental projects that LH announces starting the 20th. This makes it possible to secure additional non-apartment volume that had previously not been included as purchase targets.
The "construction first, cost verification later" method for early construction starts has been in effect since the 29th of last month. It is applied retroactively as of May 22. The ministry plans to induce early construction by shortening pre-construction procedures for sites where cost verification is underway or where verification is needed to begin construction this year.
Han Sung-soo, MOLIT's residential welfare policy director, said, "In addition to these supplementary measures, we plan to communicate with the field at every stage of newly built purchase-rental housing, identify difficulties, and make improvements." He added, "We will intensively supply non-apartment housing in a short period where people can reside with peace of mind without worrying about jeonse (a Korean lease system requiring a large lump-sum deposit instead of monthly rent) fraud, and provide it at monthly rents cheaper than surrounding market prices to ease the housing burden on young people."
