Government rolls out full-scale purchase-rental program to fast-track non-apartment supply

The government has decided to fully implement its newly built purchase-rental housing program as part of efforts to rapidly expand the supply of non-apartment units.

The Ministry of Land, Infrastructure and Transport said Monday it would push ahead with the "Non-Apartment Supply Supplementary Plan" — announced May 22 — to accelerate the supply of officetels, urban-type residential housing and other non-apartment units.

The measures center on three pillars: minimizing upfront financial burdens, easing purchase eligibility criteria and encouraging early ground-breaking.

Effective that day, Korea Land and Housing Corporation (LH) will raise the land acquisition subsidy paid to developers to up to 80 percent of land costs. The Korea Housing and Urban Guarantee Corporation (HUG) will also strengthen project financing (PF) loan guarantee support for remaining land costs, design fees and other early-stage project expenses. Construction cost payments tied to progress rates on a three-month cycle will also be introduced.

These financing relief measures will apply retroactively to all projects already submitted this year to maximize their effect. The upfront project cost burden is expected to drop sharply — from around 30 percent of land costs to as low as 10 percent — while cash flow difficulties during construction will be eased, allowing developers to move forward more quickly.

The ministry said it plans to actively attract additional private developers who had been interested in the program but held back due to financing concerns, in order to accelerate the delivery of purchase-rental housing.

Purchase eligibility criteria will also be eased. Partial-building purchases — rather than requiring acquisition of an entire building — will now be permitted, and the relaxation of minimum purchase requirements in regulated zones takes effect immediately. The changes will allow LH to secure additional non-apartment units previously excluded from its purchase targets, enabling the supply of rental housing across a wider range of locations.

Meanwhile, for projects already contracted under a construction-cost-linked arrangement, lengthy cost verification processes had been causing delays. To address this, the ministry will introduce a "ground-breaking first, cost verification later" approach.

Projects that had already completed cost verification and broken ground as of the May 22 announcement date may proceed as planned. For projects still undergoing cost verification, or those requiring verification to begin construction this year, the "ground-breaking first, cost verification later" method will apply to encourage private developers to start work earlier.

Han Seong-su, the ministry's director general for residential welfare policy, said the Ministry of Land, Infrastructure and Transport, LH and HUG plan to actively communicate with developers at every stage of the newly built purchase-rental housing process — from site acquisition and permitting through ground-breaking and completion — to continuously identify and resolve difficulties in the field.

He also said the ministry would "do its utmost to intensively supply non-apartment housing in a short period of time — housing where residents can live without fear of jeonse fraud — and provide it at monthly rents below surrounding market prices, so as to ease the housing burden on young people."