HUG to Support Up to 30% of Land Costs for Initial Project Funding, Easing Financial Burden for Build-to-Rent Operators

Launch of Guarantee Product for Early Support of Initial Project Costs
Low-Interest Financing for Pre-Construction Expenses such as Regulatory Approvals

Housing and Urban Guarantee Corporation (HUG) is launching a new guarantee product that provides support for initial project costs up to 30% of land costs at low interest rates, aiming to ease the funding burden on new build-to-rent housing project operators prior to the commencement of construction.

On July 20, HUG announced that it will revise its Urban Housing Special Guarantee operation policy, enabling early support for initial project costs. This measure is a follow-up to the Ministry of Land, Infrastructure and Transport's supplementary plan announced in May to strengthen the supply of non-apartment housing.

The Urban Housing Special Guarantee is a system that allows business operators who have signed new construction and acquisition agreements with acquisition agencies to obtain necessary construction funds at low interest rates from financial institutions with HUG's guarantee. Previously, operators could finance up to 90% of total project costs at low interest rates via HUG; however, there were limitations, as initial funds needed before groundbreaking, such as design and regulatory approval expenses, had to be sourced by the operators themselves.

With this revision, operators can now receive support for initial project funds up to 30% of land costs. When combined with the Land Acquisition Support Fund provided by Korea Land & Housing Corporation (LH), which covers up to 80% of land costs, the burden for operators in securing initial project capital is expected to drop to just 10% of the land cost (down from the previous 30%). This new guarantee product will also be retroactively applied to all projects submitted this year.

Choi Inho, President of HUG, stated, "With the improved structure for new construction purchase agreements, business operators will be able to smoothly receive the initial project funding they require from HUG before groundbreaking. Through this, we expect to support the government's plans to bolster non-apartment housing supply and facilitate the early start and increased supply of non-apartment units in the metropolitan area."

This content was produced with the assistance of AI translation services.