South Korea is moving ahead with a program to convert real estate project financing sites that have stalled or slowed for lack of funding and profitability into rental homes purchased by the Korea Land & Housing Corporation (LH). The government will widen the range of eligible sites and purchase types, building on a pilot run last year that produced purchase agreements covering 12 sites and 2,600 units.
The Ministry of Land, Infrastructure and Transport, the Financial Services Commission, LH and the Financial Supervisory Service said on the 26th that they will hold a meeting of the agencies involved on the 27th to review progress and discuss making inter-agency cooperation a regular practice.
This year the program will extend beyond distressed sites, which were the sole focus last year, to sites proceeding normally. Sites at risk of delaying construction because of held-up financing are also under review. The purchase types will expand from agreements to buy newly built units to include purchases of existing buildings, bringing in sites already completed and those nearing completion. The acquisition tax cut on land and buildings for developers selling new construction will widen to 70% from the current 15% through next year, and LH's land acquisition support will rise to as much as 80% of land costs from 70%.
The FSS and LH have completed an initial review of viable sites and are now confirming whether current developers want to sell. Sites submitted will go through a purchase review, with acquisitions to follow within the year. The homes secured are newly built units in urban locations such as areas near subway stations in the greater Seoul area, and the government expects them to be supplied to young adults and newlyweds at rents below market rates.
"PF sites are the resource that can become housing the fastest," said Cho Sung-tae, director of the housing welfare support division at the land ministry. "We will make active use of purchase-based rental housing so that stalled sites become homes for young adults and newlyweds."
