HUG cuts guarantee fees by up to 60%, benefiting 140,000 homes and saving W138b

Korea Housing & Urban Guarantee Corp. (HUG) is launching sweeping reforms — including lower guarantee fee rates and expanded project financing (PF) guarantees — to support housing developers struggling with liquidity pressures amid a sluggish real estate market and a contraction in PF lending.

HUG said Tuesday it had prepared and immediately begun implementing measures to ease the financial burden on housing developers and stimulate housing supply. The steps follow a construction industry roundtable convened in April under the prime minister in response to conditions in the Middle East.

To address the funding crunch weighing on developers, HUG will temporarily cut guarantee fee rates by 30% on pre-sale guarantees and reconstruction and redevelopment project loan guarantees through May 31, 2027.

The reduction covers four guarantee types: housing pre-sale guarantees, mixed-use residential pre-sale guarantees, officetel pre-sale guarantees, and pre-occupancy lease deposit guarantees. For pre-sale projects that have already received PF loan guarantees, the discount will be expanded to as much as 60 percent to maximize improvements to project viability.

The 30% fee cut also applies to reconstruction and redevelopment project loan guarantees, which help finance such projects. The discount will be applied automatically — with no separate application required — not only to newly approved projects but also to installment guarantee issuances for remaining project costs at previously approved sites. HUG estimates the measures will benefit roughly 400 project sites and 140,000 homes, saving a combined W138 billion (about $89.2 million) in guarantee fees.

The scope and eligibility requirements for PF loan guarantees will also be significantly relaxed. The special PF loan guarantee provisions, originally set to expire June 30, will be extended by one year through June 30, 2027, and new special provisions will be introduced to cover rental PF projects that had previously been excluded.

The pre-sale rate requirement for developers seeking to use HUG guarantees to repay existing high-interest PF loans will be lowered from 60 percent to 50 percent. The window for applying for PF loan guarantees will also be extended from "before ground-breaking" to "before approval of the resident recruitment announcement," allowing projects already under construction to apply and closing a gap in coverage.

HUG also plans to expand support for market redevelopment projects under the Special Act on the Promotion of Traditional Markets and Shopping Districts, extending guarantee eligibility beyond projects carried out by cooperatives to include those implemented by market redevelopment corporations.

"This across-the-board strengthening of guarantee support will provide meaningful financial relief to housing developers facing a liquidity crisis," HUG President Choi In-ho said. "We will do our part to prevent guarantee incidents through rigorous risk management while supporting a smooth housing supply and a recovery in construction activity."

Meanwhile, HUG ranked first among public enterprises in a management performance assessment by CEO Score, a corporate data research firm, which analyzed management data from 30 state-owned enterprises — 14 market-type and 16 quasi-market-type — based on the 2025 public institution management evaluation handbook.