HUG cuts PF guarantee fees by up to 40% to accelerate housing supply

The Korea Housing and Urban Guarantee Corporation will cut project financing guarantee fees as a follow-up to the government's Aug. 13 rapid housing supply measures. The move aims to ease the financial burden on housing developers struggling with a funding crunch caused by soaring construction costs and interest rates, and to spur early ground-breaking at stalled PF project sites.

HUG announced Tuesday that it will reduce PF guarantee fees by a base rate of 30%, with an additional 10 percentage-point discount for project sites that break ground within three months of guarantee approval — bringing the maximum reduction to 40%.

The measure was designed to lower actual financing costs for developers at a time when rising raw material prices and labor costs have compounded their funding burdens.

In addition, HUG will pursue expanded PF guarantee supply and regulatory improvements included in the Aug. 13 package. The guarantee ceiling for projects in the greater Seoul metropolitan area will be raised to 70% of construction costs — 80% for projects in Seoul — and the gross floor area requirement for non-apartment housing (at least 5,000 square meters in the metropolitan area) will be temporarily lifted to boost supply of that housing type.

"Through this guarantee fee incentive, we will reduce the upfront project cost burden on housing developers and encourage early ground-breaking," HUG President Choi In-ho said. "We will actively support viable PF project sites so they can move quickly into housing supply."

Meanwhile, HUG is also offering a temporary 30% discount on its housing pre-sale guarantee fees — which protect pre-sale contract holders in the event of a developer's insolvency or bankruptcy — through May next year.