The Ministry of Land, Infrastructure and Transport, the Financial Services Commission, the Korea Land & Housing Corporation (LH), and the Financial Supervisory Service will push in earnest a project to convert real estate project financing (PF) business sites that have stopped or are delayed due to a lack of funds or profitability into LH purchase-for-lease dwellings. The plan is to quickly supply dwellings in good locations while easing developers' unsold-inventory burdens to normalize the stalled PF projects.
The Ministry of Land, Infrastructure and Transport (MOLIT), the Financial Services Commission (FSC), LH, and the Financial Supervisory Service (FSS) will hold an interagency meeting on the 27th to review the status of converting PF business sites to LH purchase-for-lease. They also plan to discuss making interagency cooperation routine to support future conversions of PF business sites to purchase-for-lease.
Since last year, the government has been working with related agencies to convert PF business sites into LH purchase-for-lease dwellings. When the Financial Services Commission (FSC) and the Financial Supervisory Service (FSS) provide the Ministry of Land, Infrastructure and Transport (MOLIT) and LH with information on PF business sites willing to join the LH purchase-for-lease program, LH reviews business sites that could be purchased and, through the FSS and others, guides developers on the relevant details.
After the developer finalizes the intention to sell, LH conducts a review and signs a purchase agreement. Through this process last year, purchase agreements were signed for a total of 12 business sites, covering 2,600 units.
Based on the results confirmed during last year's pilot phase, the government plans to fully roll out the project this year by expanding eligible business sites and purchase types and by enhancing incentives such as tax benefits.
First, the scope of projects eligible for purchase-for-lease conversion will be expanded. Last year, only PF business sites with distress were eligible, but starting this year, sites where projects are proceeding normally will also be included. Accordingly, business sites at risk of delayed groundbreaking due to funding holdups will be reviewed for conversion to LH purchase-for-lease. The purchase types will also expand from the existing new-build purchase agreements to include acquisitions of existing properties. As a result, not only already completed PF business sites but also those nearing completion may be included as purchase targets.
With the expansion of support such as tax reductions for purchase-for-lease operators through measures including the "rapid supply of dwellings" plan released on the 13th, the government expects demand for converting PF business sites to purchase-for-lease to increase.
Specifically, the reduction rate for acquisition taxes on land and buildings for new-build purchase operators will be expanded from the current 15% to 70% through 2027. It will then be 50% in 2028 and revert to 15% from 2029. LH's land acquisition support funds will also increase from 70% of the land cost to up to 80%. In regulated areas of the greater Seoul region, the cost method will also be applied so that increases in construction costs can be reflected in purchase prices.
The Financial Supervisory Service (FSS) and LH have completed a first-round review of PF business sites with potential for conversion to purchase-for-lease, considering overall conditions such as location and rental demand. They are currently checking developers' willingness to sell for those sites, and submissions will proceed through purchase reviews with plans to link them within the year to either new-build purchase agreements or acquisitions of existing properties.
LH will also take part in the "PF distressed business site sale briefing" to be held at the Financial Supervisory Service (FSS) on the 15th of next month to introduce the LH purchase-for-lease program. At the briefing, LH will conduct on-site consultations for interested business owners to encourage developers to participate in the purchase-for-lease program.