HUG accelerates quality housing supply through jeonse recovery homes, private rental REITs

Korea Housing Finance & Urban Guarantee Corp. (HUG) is expanding its role beyond construction guarantees, actively working to increase the supply of quality rental housing. Since President Choi In-ho took office, the agency has declared its ambition to become a "public platform for housing supply and residential finance," driving a series of sweeping changes.

The initiative receiving the most attention from Choi is the Deundeun Jeonse Housing program, under which HUG directly purchases homes involved in jeonse guarantee accidents and converts them into public rental units. The agency has acquired about 6,700 units to date, of which roughly 3,800 have been made available as rental housing. Previously, units were released on a quarterly basis, but this year HUG introduced an on-demand supply model to speed up availability.

As a first step under the new model, HUG plans to release about 300 additional Deundeun Jeonse units in July. In April, the agency also broadened its acquisition targets — previously focused on multi-family homes and officetels — to include apartment complexes of 150 units or more, making the program accessible to middle-income families and households with children. Units are offered as jeonse at roughly 90 percent of the prevailing market price, easing the housing cost burden, and because HUG itself serves as the landlord, tenants can live for up to eight years without worrying about the return of their jeonse deposit. The program draws on existing housing stock, enabling faster supply, and its concentration in high-demand areas such as Seoul and the greater metropolitan area is contributing to stability in the jeonse market.

HUG is also actively advancing its publicly supported private rental real estate investment trust (REIT) program, aimed at expanding the supply of high-quality, long-term rental housing preferred by middle-income households. With growing demand from developers looking to convert pre-sale projects into rental ones, the agency plans to supply about 21,000 units by 2030. The strategy combines public seed funding with private-sector capacity to deliver quality long-term rental housing where residents can feel secure. HUG also plans to actively support non-apartment housing — which can be built faster than apartments — to ensure it breaks ground without delay.

In line with the non-apartment supply expansion measures announced in May, HUG has introduced new project financing (PF) guarantees and pre-sale guarantees dedicated to non-apartment housing. The agency is supporting smooth financing and also serving as the financial services window at the on-site support center operated by the Ministry of Land, Infrastructure and Transport. In addition, HUG has raised the business loan ceiling for urban-type residential housing to up to 120 million won ($77,700), and has introduced remodeling fund loans and quasi-housing mortgage guarantees for projects converting non-residential facilities into residential ones.

To address a range of emerging needs in the housing supply process, HUG plans to launch four new guarantee products in the second half of this year. The agency will offer rental guarantees for senior welfare housing — a category previously excluded from legal classification as rental housing and thus left without protection — to support housing stability for older residents. It will also introduce relocation cost and contribution guarantees for residential regeneration projects, along with public maintenance project loan guarantees, to facilitate the redevelopment of aging neighborhoods. Additionally, HUG aims to support smoother financing for real estate trust-based projects through a new guarantee on the securitization of trust cost reimbursement claims.