The Korea Land and Housing Corporation (LH) has introduced a tailored financial support product aimed at increasing private construction firms' participation in public housing projects.
LH said on the 21st that it held the "LH Private-Participation Project Financial Support Briefing" together with the Korea Housing and Urban Guarantee Corporation (HUG) at its Southern Gyeonggi Regional Headquarters. The briefing was organized to expand private construction firms' participation in "private-participation public housing projects" and to revitalize the sluggish private construction sector.
To implement the government's housing supply expansion plan (the Sept. 7 measures), LH established a financial support system optimized for public housing projects after several rounds of working-level consultations with HUG and related agencies. LH said it plans to present effective solutions to a construction industry facing funding difficulties amid high interest rates, thereby encouraging the participation of leading construction firms and accelerating the pace of public housing supply.
Under the theme "A Paradigm Shift for the Rapid Supply of Public Housing," the briefing proceeded in the order of an overview of private-participation projects and the progress of financial support (LH), the structure and operation of financial support products (HUG), and a Q&A session.
The financial support product introduced that day targets public sale districts of contract-based private-participation projects (direct settlement method). It can be applied not only to newly announced districts but also to districts where construction has already begun and where private operators have pre-financed amounts due to insufficient sales revenue, meaning LH's unpaid progress payments.
The guarantee limit provides up to 80% of total project costs for standard-type public sales, and up to 90% for Newlywed Hope Towns and districts with delayed pre-subscriptions. The loan interest rate is expected to be at the level of HUG-guaranteed project financing (PF) loan rates, while a single guarantee rate of 0.324% per year applies.
Private operators who attended the briefing also responded with enthusiasm. B, a financial executive at construction firm A, said, "With the recent deterioration in funding conditions and rising construction costs, it had not been easy to decide on new construction starts or project participation, but the financial support product introduced this time is expected to ease funding pressures." He added, "We plan to review and participate in private-participation projects more actively going forward."
Oh Ju-heon, head of LH's Public Housing Division, said, "We will continue to do our best to drive the recovery of the construction sector based on win-win cooperation with the private sector, and to swiftly supply high-quality public housing that the public can trust."
Meanwhile, after concluding the briefing, LH signed a "Financial Guarantee Implementation Agreement for Expanding the Supply of Private-Participation Public Housing Projects" with HUG. Based on the agreement, the two institutions plan to strengthen their cooperation framework and fully launch the operation of the financial support system.
