The Korea Land and Housing Corporation (LH) will purchase not only troubled real estate project financing (PF) business sites but also normal business sites facing concerns over delayed construction due to funding difficulties, and supply them as rental housing for young adults and newlyweds.

The Ministry of Land, Infrastructure and Transport, the Financial Services Commission, LH, and the Financial Supervisory Service announced on August 26 that they will hold an inter-agency meeting on August 27 to review the progress of converting PF business sites into LH-purchased rental housing and discuss plans to regularize inter-agency cooperation.

Starting last year, the FSC and the FSS provided information on PF business sites willing to participate in the LH purchased rental housing project to the Ministry of Land, Infrastructure and Transport and LH, and LH conducted business feasibility reviews to guide developers on transitioning to purchased rental housing as a pilot project.

Once developers confirm their intent to sell, LH undergoes a deliberation process and enters into purchase agreements. Through this method, new construction purchase agreements were signed for 2,600 households across 12 PF business sites last year.

Starting this year, the scope of eligible projects will be expanded.

Last year, the program targeted only distressed PF business sites, but moving forward, it will also review sites that are proceeding normally but face risks of delayed construction due to funding bottlenecks.

The purchase methods will also be broadened from new construction purchase agreements to include existing building purchases, allowing LH to acquire business sites that are already completed or nearing completion.

Support for business operators will also be strengthened.

The acquisition tax reduction rate for land and buildings for new construction developers will be raised from the current 15% to 70% through next year.

LH's land acquisition support fund will also be expanded from 70% of the land cost to a maximum of 80%.

In regulated areas within the Seoul metropolitan region, a cost method will be applied alongside when calculating the purchase price to reflect construction cost increases in the acquisition price.

The FSS and LH are conducting a preliminary screening of PF business sites with potential for conversion, taking into account location and rental demand, to verify developers' intent to sell.

Submitted business sites will undergo purchase deliberation with plans to sign new construction purchase agreements or existing building purchases within the year.

Urban housing secured through this process, such as areas near subway stations in the metropolitan area, will be supplied to young adults and newlyweds at rents lower than market rates.

The government explained that from the developers' perspective, with the buyer and purchase price confirmed, they can lower the risk of unsold units and accelerate funding and construction.

(Photo provided by LH Korea Land and Housing Corporation, Yonhap News)