[Image source=Yonhap News]

[Asia Economy Reporter Moon Jiwon] The Ministry of Land, Infrastructure and Transport announced on the 6th that it plans to change the operation plan of the Housing and Urban Fund to expand the supply of multi-family purchase rental and private rental housing, and to lower the interest rates on monthly rent loans for housing stability.

First, 9,000 public jeonse (long-term lease) houses suitable for 3-4 person households will be supplied nationwide this year, including 3,000 units in Seoul.

Public jeonse houses are medium-sized homes over 50㎡ with three or more rooms. Non-homeowners can move in regardless of income or assets, and the deposit is set at about 90% of the market price. Residents can live on a jeonse lease for up to six years.

This month, applicants will be recruited for 117 units of the first public jeonse housing in Anyang-si, Gyeonggi-do, with tenant selection completed in June, followed by contracts and move-in.

Additionally, 8,000 housing units (6,000 public, 2,000 private) remodeled from hotels and commercial buildings will be supplied to allow single-person households to live in city centers with convenient transportation and well-established living infrastructure.

Through the November 19th jeonse measures last year and the February 4th measures this year, the supply target was increased by 4,000 units compared to the original goal, and the related budget has been fully secured through this fund plan revision.

In the first half of the year, about 50 young people are expected to move into public rental housing remodeled from a tourist hotel in Yeongdeungpo. Tenant selection has already been completed. For about 30 tourist hotels and commercial buildings applied for purchase by public housing operators, purchase decisions will be made as soon as reviews are completed in the first half of the year, and remodeling construction will begin.

Private rental housing supply will also be increased. Currently, private officetel developers mainly finance through high-interest project financing (PF) loans, so they prefer monthly rent to secure stable cash flow.

Therefore, when private officetel developers supply newly built officetels as jeonse, they will be supported with low-interest loans at about 1.5% per annum, up to 150 million KRW per unit, for private rental construction funds. Through this low-interest fund loan support, the supply of jeonse units for 1-2 person households is expected to expand.

This measure will be implemented from next month after administrative procedures such as loan regulation revisions. Private developers wishing to apply for loans can apply at Woori Bank, the trustee bank of the Housing and Urban Fund.

Furthermore, to encourage the expansion of urban housing supply, the loan limit for public-supported private rental housing in urban areas will be increased from 50 million to 100 million KRW per household to 70 million to 120 million KRW.

To alleviate the housing cost burden of vulnerable groups struggling due to COVID-19, the interest rate for the general type of housing stability monthly rent loan will be lowered from 2.0% to 1.5%. The housing stability monthly rent loan targets those living in homes with exclusive area under 85㎡ and lease deposits under 100 million KRW (monthly rent 600,000 KRW), with a combined annual income of 50 million KRW or less for couples. The loan limit is 400,000 KRW per month for 24 months.

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