South Korea Boosts Support for Rental Housing Developers

The Ministry of Land, Infrastructure, and Transport announced that new support measures for private developers of newly purchased rental housing will take effect on August 20. These initiatives aim to ease the financial burden on developers and accelerate the supply of non-apartment housing.

Key provisions include an increase in the land acquisition support fund provided by the Korea Land and Housing Corporation (LH) to up to 80% of the land cost, a significant rise from the previous 30% level. Additionally, the Housing & Urban Guarantee Corporation (HUG) will enhance its project financing (PF) loan guarantees for initial project expenses, such as remaining land payments and design fees. Payments for construction will be made quarterly based on the progress rate.

To further incentivize participation and address potential cash flow issues, these financial relief measures will be applied retroactively to all applications received this year. This move is expected to substantially lower the initial capital required from private developers, easing concerns about funding shortages during the construction phase.

In addition to financial support, the ministry is also relaxing acquisition criteria. The minimum purchase requirement within regulated areas will be lowered from '19 units in Seoul and 50 units in Gyeonggi Province' to '10 units or more in Seoul and Gyeonggi Province.' This change, along with the allowance for partial unit purchases within a building rather than requiring the entire building, will be immediately effective for new applications announced by LH starting August 20.

Han Seong-soo, Director of Housing Welfare Policy at the Ministry of Land, Infrastructure, and Transport, stated, "We will actively communicate with 현장 (field sites) at every stage of the new construction purchase rental housing project for non-apartment supply and continuously identify and improve difficulties." He added, "We will focus on concentrating the supply of non-apartments that can be lived in with peace of mind without worries about jeonse fraud, and reduce the housing burden for young people by providing them at a monthly rent lower than the surrounding market price."

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We will actively communicate with 현장 (field sites) at every stage of the new construction purchase rental housing project for non-apartment supply and continuously identify and improve difficulties. We will focus on concentrating the supply of non-apartments that can be lived in with peace of mind without worries about jeonse fraud, and reduce the housing burden for young people by providing them at a monthly rent lower than the surrounding market price.