[Exclusive] Is It Over Once the Jeonse Measures Are Announced?… Zero Issuance of 'Dosim Jutaek Teugyak Bojeung'

Government to Establish 'Urban Housing Special Guarantee' in Early April
Private Construction Project Loans Guaranteed Up to 90%
Ministry of Land Initially Promoted "Loans Available by Late April"
Months Later, Only 1 Application, 0 Issued
Exhibition Administration... LH "Lack of Promotion... Will Make Efforts"

On the 17th, property listings were posted at a real estate agency in Songpa-gu, Seoul. Photo by Mun Ho-nam munonam@

The government's policy to expand public jeonse housing, aimed at stabilizing soaring jeonse prices, is currently stalled. The 'New Construction Purchase Agreement,' which involves purchasing newly built homes from the private sector to use as public jeonse housing for the middle class, has shown poor performance. Additionally, the newly introduced 'Urban Housing Special Guarantee' by the government to revitalize this policy has recorded zero issuances for nearly five months. This has been criticized as a typical example of 'showcase administration.'

According to the Ministry of Land, Infrastructure and Transport, Korea Land and Housing Corporation (LH), and Housing and Urban Guarantee Corporation (HUG) on the 17th, the issuance count for the 'Urban Housing Special Guarantee' system, newly introduced in early April as part of the public jeonse expansion policy, remains at zero. Only one application has been received during this period.

The 'Urban Housing Special Guarantee' is a system where HUG provides guarantees to financial institutions allowing project operators constructing public jeonse housing under new construction purchase agreements with public institutions like LH to receive low-interest loans covering up to 90% of the project cost. The purpose is to reduce the financial burden on private operators lacking sufficient equity capital and significantly increase the supply of newly built public jeonse housing.

At the time of the system's introduction, the Ministry of Land, Infrastructure and Transport promoted it by stating, "With the implementation of the Urban Housing Special Guarantee, private operators can start projects with only 10% of the project cost," and "actual loans are expected to be provided by first-tier banks as early as the end of April." However, with nearly five months passed and no performance, voices have emerged questioning whether this was merely a 'showcase administration' for appearances.

A HUG official explained, "Although the product was introduced in April, it took one to two months to conclude agreements with banks, and there were also difficulties in cooperation with LH and SH," adding, "We are currently reviewing the first guarantee issuance scheduled for the end of this month."

Some in the industry have also raised concerns about the system's effectiveness. Although the government initially promoted loans covering up to 90% of the project cost, the land cost prepaid by the project operator is excluded from the guarantee, making it difficult to receive support equivalent to that amount.

Private operator A said, "To receive a HUG guarantee, the project owner must first acquire ownership of the land, but typically land-secured loans cover only 60-70% of the land purchase price," adding, "However, HUG's stance is that guarantees cannot be issued for the 30-40% of land costs prepaid by the operator, so the claim of 90% low-interest loans for project costs is exaggerated."

Contents of Urban Housing Special Guarantee (Data provided by Ministry of Land, Infrastructure and Transport)

While the government's measures to revitalize the new construction purchase agreement are becoming ineffective, securing public jeonse housing is also facing difficulties. According to data recently obtained by National Assembly Land, Infrastructure and Transport Committee member Song Eon-seok from the Ministry of Land, Infrastructure and Transport, the government's nationwide target for new construction purchase agreements in the first half of this year was 7,000 households, but actual performance was only 4,300 households (61.4%).

An LH official attributed the poor guarantee performance to "insufficient promotion targeting private operators," and explained, "To encourage participation, we plan to actively promote the product through regional headquarters' purchase departments and HUG sales offices as hubs." HUG also responded to criticisms that guarantees up to 90% are difficult by stating, "We are working with banks to create customized products."

However, many in the industry express concerns that the expansion of public jeonse housing is unlikely due to the government's insufficient follow-up management. An industry insider said, "A 90% loan guarantee for project costs is somewhat groundbreaking, but such poor performance shows a lack of the government's determination to stabilize jeonse prices," adding, "It seems the new construction purchase agreement system itself lacks appeal."

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