The government's regulatory easing card prepared to accelerate the supply of non-apartment housing such as officetels and urban lifestyle housing will go into full operation.
The Ministry of Land, Infrastructure and Transport said it will fully implement the "supplementary plan for non-apartment supply," announced in May, starting on the 20th. The move focuses on unblocking the stalled supply of dwellings in city centers by smoothing private builders' cash flow and lowering purchase requirements. The core of the measures is threefold: ▲ easing initial expense burdens ▲ relaxing purchase requirements ▲ inducing early groundbreaking.
The Ministry of Land, Infrastructure and Transport (MOLIT) first decided to reduce the funding pressure private developers face when securing land. It will raise the share of land acquisition support provided by Korea Land & Housing Corporation (LH) from 70% of the land price to up to 80%. In addition, for expense items incurred at the start of a project such as remaining land payments and design fees, it will further strengthen project financing (PF) loan guarantees by Korea Housing & Urban Guarantee Corporation (HUG). Construction costs will also not be paid in a lump sum; instead, a system was introduced to review progress every three months and pay in installments.
To maximize policy impact, these financial support measures will be applied retroactively, in the same manner, to all business sites that already applied this year. As a result, the amount private developers must secure on their own at the outset is expected to fall significantly from about 30% of land costs to around 10%. The Ministry of Land, Infrastructure and Transport (MOLIT) said that as private builders that had hesitated due to tight funding streams enter the market en masse, the supply of rental dwellings will gain speed.
The criteria for purchasing dwellings will also become far more flexible. Departing from the previous approach of buying an entire building in one go, a new "partial purchase" method will allow buying only selected units within a building. The strict minimum number of units required for purchase in regulated areas will also be uniformly lowered to 10 units or more, regardless of location, from 19 units in Seoul and 50 in Gyeonggi. As LH's options for dwellings it can purchase expand, rental dwellings can be placed in a wider range of locations favored by demand.
Administrative procedures that took excessively long have also been put on the operating table. To prevent delays caused by cost verification procedures, the approach of "starting construction first and verifying construction costs later" was introduced and has been in operation since the end of last month. Business sites that had been tied up at the cost verification stage can begin construction immediately after approvals, greatly shortening pre-construction waiting times.
Han Seong-su, housing welfare policy director at the Ministry of Land, Infrastructure and Transport (MOLIT), said, "The Ministry of Land, Infrastructure and Transport, LH, and HUG plan to actively communicate with the field and continuously identify and improve difficulties at every stage (land acquisition, approvals, groundbreaking, completion, etc.) of new-build purchase-rental dwellings for non-apartment supply, in addition to these supplementary supply measures."