[Asia Economy Reporter Noh Kyung-jo] The Korea REITs Association announced on the 7th that it has requested the Financial Services Commission and the Ministry of Land, Infrastructure and Transport to ease mortgage loan regulations on rental housing REITs.
Current banking supervision regulations allow loans only once for new housing construction, and for housing operators who are not constructing new housing, refinancing existing loans without increasing the amount (with the existing financial institution) is permitted. The problem is that due to recent interest rate hikes and tightening liquidity, existing banks have refused to extend loans, making refinancing impossible and putting the projects at risk of collapse.
Accordingly, the association proposed establishing an exception in the banking supervision regulations that would allow rental housing REITs to obtain new mortgage loans regardless of whether they are for construction or acquisition rental housing, and to recognize refinancing loans from other financial institutions.
An association official stated, "There is demand for rental housing for low-income people, and especially during periods of housing price decline, rental demand increases further," adding, "To enable rental housing REITs to supply affordable rental housing stably, easing loan regulations is necessary." He also emphasized, "REITs distribute operating profits to investors, sharing rental housing income with the public, so regulatory easing is even more necessary."
He continued, "REITs receive business approval from the Ministry of Land, Infrastructure and Transport and are continuously managed and supervised through regular inspections and occasional monitoring during operation," adding, "They are distinguished from rental operators with speculative purposes, yet they are subject to the same regulations, which is unfair."
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