LH enhances new construction purchase program, offering faster payments and shorter construction times

The Korea Land and Housing Corporation (LH) is overhauling its new construction purchase agreement program to significantly reduce the initial financial strain on developers. The corporation will expand land acquisition support and implement a new payment schedule, disbursing construction funds every three months based on the project's progress. Furthermore, LH plans to permit construction to commence before final cost verification, potentially shortening project timelines by up to five months.

These improvements align with the government's policy to boost housing supply. The revised program aims to accelerate the delivery of public rental housing in urban centers by alleviating developers' burdens related to land acquisition, design, permitting, and financing. Key enhancements include increased land acquisition subsidies, revised payment structures tied to construction milestones, the introduction of initial project cost guarantees from the Housing & Communities Guarantee Corporation (HUG), streamlined procedures for faster construction starts, and the allowance of partial property sales.

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We have comprehensively reformed the new construction purchase agreement program to supply high-quality, new construction rental housing in prime urban locations more quickly.

The government has raised the target for new construction purchases in the Seoul metropolitan area to 62,000 units over the next two years, an increase of 11,000 units from the previous goal. Within regulated areas of the Seoul region, the target has been expanded by 21,000 units to 45,000 units.

LH is increasing the land acquisition support for general management-type land trust projects in the Seoul metropolitan area from a maximum of 70% to 80% of the land cost. The standard support rate is 60%, with an additional incentive of up to 20% for developers who finalize design consultations and purchase agreements early. For projects outside the Seoul metropolitan area, an early agreement incentive of up to 5% of the land cost has been introduced, along with potential waivers of early termination penalties for qualifying projects. A new HUG guarantee product will also be established to support initial project costs, such as remaining land payments and design/permitting expenses, allowing developers to secure low-interest loans for up to approximately 30% of the land cost.

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We will quickly resolve difficulties in project implementation and accelerate supply to ensure housing stability for the homeless.