Urban Regeneration Seed Loans Offer Interest Rate Benefits for Public Projects... Loan Restrictions in Rapidly Rising Areas

From Next Month 1st, Up to 1.2% Interest Rate Discount for Highly Public Projects
Loan Limits for Individuals and General Corporations in Areas with Rapid Land Price Increases

General residential area near Mia Station in Gangbuk-gu, Seoul, selected as the second candidate site for the urban public housing complex development project. Photo by Jang Jin-hyeong aymsdream@

[Asia Economy Reporter Kangwook Cho] The Ministry of Land, Infrastructure and Transport announced on the 30th that starting from the 1st of next month, it will implement changes to the limits and interest rate conditions of the policy loan product ‘Urban Regeneration Seed Loan,’ which utilizes the Housing and Urban Fund, to actively promote its use in projects with high public interest.

The Urban Regeneration Seed Loan is a product that provides loans from the Housing and Urban Fund (Urban Account) for projects that create startup spaces, commercial facilities, and shared-use facilities in urban regeneration areas. Since its introduction in September 2017, it has supported a total of 271 projects with 456.2 billion KRW.

With this change, interest rates will be applied differentially according to the characteristics of the borrower (project implementer) to ensure that loans are more invested in projects with high public interest, and preferential interest rate conditions based on the public nature of the project will be introduced. Currently, a single interest rate of 1.5% per annum is applied.

If the project implementer is an individual or a general corporation, the interest rate will be raised to 1.9%, while public entities such as local governments and public institutions, or social economy actors, will receive the existing basic interest rate of 1.5%. If the project ensures public interest in operation, such as employing elderly or disabled persons, or promotes projects with high linkage to government policies like the Green New Deal, a preferential interest rate of up to 1.2% will be granted.

To prevent the loan from being used for real estate speculation, the loan limit for individuals and general corporations will be restricted in areas where land prices have risen significantly, and preferential interest rate benefits will not be provided. If the project site is located in a speculative overheating district, loans will be provided up to 40% of the total project cost; in areas that are not speculative overheating districts but have a land price change rate at least 1 percentage point higher than the national average over the past six months, loans will be provided up to 50-60%. In particular, loans will not be granted in areas that are both speculative overheating districts and have a land price change rate at least 1.5 percentage points higher than the average.

For eligible projects, the types of projects supported under the living SOC category will expand from the existing 13 types to 25 types, including additions such as water supply and sewage, city gas, and general hospitals. The special operating rules for facilities, which were previously ambiguous and imposed excessive burdens on borrowers, will be clarified and changed into preferential interest rate conditions to alleviate the burden on borrowers.

For projects that have already been approved for loans, interest rates will change from the 1st of next month according to changes in the fund operation plan. Other changed loan conditions will apply when extending the loan maturity.

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