Korea Housing & Urban Guarantee Corporation (HUG) said on the 13th that it launched a dedicated financial guarantee product to help construction companies participating in private-participation public dwellings projects raise funds.
The newly created guarantee product targets public presale projects under the "direct settlement method," among the private-participation public dwellings projects pursued under the government's Sept. 7 supply measures, in which Korea Land & Housing Corporation (LH) and private developers jointly implement the project and LH settles construction costs after completion.
Previously, construction companies had to inject construction costs first and then receive them from LH after completion, so they had to take out high-interest loans based on their own credit or inject their own funds.
This product guarantees up to 80% of total project costs (up to 90% for Newlywed Hope Town) and applies a single annual guarantee fee rate of 0.324%, reducing the financial burden.
HUG also significantly simplified screening and operating standards compared with the past, considering the unique structure of the project. It also plans to ensure stability and transparency in fund execution by operating a system that issues guarantees in partitions in line with LH's progress inspection results.
With the launch of the new product, HUG has set up and is operating a dedicated consultation and screening window at its headquarters' fund business office.
Within this month, it will sign a memorandum of understanding (MOU) with LH and hold briefings and meetings for construction companies participating in private-participation public dwellings projects.
Choi In-ho, HUG president, said, "This private-participation public dwellings project financial guarantee is a win-win finance model born out of close communication and consultation with the Ministry of Land, Infrastructure and Transport, LH, and the private construction industry, and it will take the lead in helping the dwellings industry, which is facing a credit crunch, achieve the government's dwellings supply goals."