The 'local unsold housing assurance buyback' project aimed at revitalizing local construction demand will be launched in earnest.
The Ministry of Land, Infrastructure and Transport announced on the 4th that it will actively promote the local unsold housing assurance buyback project, which was introduced as a supplementary budget and a plan to strengthen local construction investment.
The local unsold housing assurance buyback project is a program in which the Korea Housing & Urban Guarantee Corporation (HUG) purchases unsold dwellings in the local area before completion at up to 50% of the selling price. It targets business sites that have issued sales guarantees with a completion rate of over 50%.
Construction companies that receive support for unsold housing purchases can buy back the unsold dwellings from HUG within one year after completing the dwellings. If they fail to find buyers, the ownership will be transferred to HUG, and the apartments will be disposed of through public auction.
The Ministry of Land will support HUG's project implementation capacity through government subsidies to significantly reduce the financing costs included in the buyback price. The scale of government assistance through equity and loans is 250 billion won. With government support, the buyback price will be set low, allowing construction companies to experience an effect similar to receiving loans at an annual interest rate of 3-4%, greatly reducing their buyback burden.
The government plans to pursue exemptions from acquisition tax, property tax, and comprehensive real estate tax when HUG acquires unsold dwellings, as well as when construction companies buy back the dwellings, significantly easing the buyback burden on construction companies.
The government plans to purchase unsold dwellings starting with 3,000 units this year, with a goal of acquiring 10,000 units by 2028.
In particular, the government plans to select support targets through a fair review process, including a committee with external members, evaluating price appropriateness, feasibility, and safety when construction companies apply for support to HUG.
Kim Gyu-cheol, head of the housing land office at the Ministry of Land, Infrastructure and Transport, said, "This assurance buyback project will support construction companies suffering from cash flow issues due to high-interest project financing loans and unsold dwellings by allowing them to replace these with low-interest loans (about 3-4%) guaranteed by public institutions," adding, "It is expected to prevent moral hazard among construction companies and induce self-help efforts to promote stable project implementation and expand housing supply."