Loans from a minimum of 1.6% for households with newborns
70,000 units supplied through March's 'Newborn Special Supply'
Youth Housing Dream Subscription Account launched in February
From 2024, households with newborns will be supported with loans at a minimum interest rate of 1.6%, and the exemption criteria for reconstruction excess profit charges will also be raised.
To overcome low birth rates, the government will implement a wide range of policies that favor couples with children, from loan systems such as housing and jeonse (key money deposit) loans for newlyweds and special supply for newborns to subscription benefits.
The newborn special loan is a system that supports home purchase and jeonse funds at a minimum interest rate of 1.6% for homeowners without housing who have given birth within two years from the loan application date. Loans in 2023 apply to babies born from January 1, 2023, and couples who gave birth without registering their marriage are also eligible. Fetuses during pregnancy are not included. If there are existing children (over two years after birth), a preferential interest rate of 0.1%p is applied. If additional children are born after receiving the loan, the interest rate is preferentially reduced by 0.2%p per child, and the special period is extended. For example, if the first child was born in January 2023 and the second child in December 2024, the preferential interest rate is 0.2%p, and the special interest rate application period is extended by 5 years.
The government announced that the actualization rate of publicly announced real estate prices will be frozen at the 2020 level. The photo shows a newly built apartment complex in Seoul on the 21st. Photo by Jinhyung Kang aymsdream@
Home purchase funds support up to 500 million KRW when purchasing an apartment with an exclusive area of 85㎡ or less and priced at 900 million KRW or less. The combined annual income of the couple must be 130 million KRW or less, and the net asset holding requirement (469 million KRW) must be met. Loans up to 500 million KRW can be obtained at a minimum interest rate of 1.6%. Refinancing loans are also supported for households owning one home. Special loans can be applied for at housing fund loan banks (Woori, Kookmin, Nonghyup, Shinhan, Hana Bank, etc.) and through the Fund e-Ddeundeun website.
The newborn special jeonse loan provides up to 300 million KRW in loans for housing deposits up to 500 million KRW (400 million KRW outside the metropolitan area) to households without housing who have given birth within two years. Interest rates range from 1.1% to 3.0% depending on income and deposit, supported for 4 years. The combined annual income of the couple must be 130 million KRW or less, and net assets must be 345 million KRW or less. The loan maturity can be extended up to 5 times, allowing a maximum loan period of 12 years. If additional children are born, the interest rate is reduced by 0.2%p per child, and the special period is extended by 4 years.
The subscription system and criteria, which have been disadvantageous to married households, will also be improved. First, from March next year, a 'newborn special supply' will be established. If there is a child aged 2 or younger as of the announcement date of the resident recruitment, special supply subscription is possible regardless of marriage status. Approximately 70,000 public and private housing units will be supplied annually, and among these, for public sales (New Home), 35% of the Nanum type, 30% of the selection type, and 20% of the general type will be allocated to newborn special supply. For private sales (about 10,000 units annually), 20% of the lifetime first-time and newlywed special supply units will be preferentially supplied to households with children. Except for youth special supply, a lottery system applying 200% of the average monthly urban worker income as the income standard for dual-income couples will be newly introduced for all public sales special supplies.
In the first half of the year, newlywed couples will be able to apply for housing subscriptions individually. The number of applications will increase from one combined application per couple to two applications, one per spouse. Even when winners are announced on the same date, couples can apply with individual accounts. If both spouses win simultaneously, previously all applications were invalidated, but from March, the first application submitted will be recognized. In the private housing general supply point system, 50% of the spouse's subscription account subscription period will be applied as points when calculating the subscription account subscription period. Previously, some delayed marriage registration due to unfavorable subscription conditions, but with individual applications allowed, newlywed couples can increase their chances of winning. Additionally, acquisition tax will be reduced up to 5 million KRW when acquiring a house to live with children born.
The exemption criteria for reconstruction excess profit charges will also change. The reconstruction excess profit recovery system is a system that taxes association members when housing prices rise above a certain level due to reconstruction. On the 7th, the 'Amendment to the Act on Reconstruction Excess Profit Recovery' was passed, adjusting the exemption threshold for excess profit charges per association member from 30 million KRW to 80 million KRW. The taxable range was also raised from 20 million KRW to 50 million KRW. The timing of imposing the reconstruction excess profit charge was delayed from the approval date of the association establishment promotion committee to the association establishment approval date. The number of complexes subject to reconstruction charges is expected to decrease from 111 to 67.
From February 2024, the 'Youth Housing Dream Subscription Account' with relaxed eligibility requirements and higher interest rates will be introduced. Eligible applicants are non-homeowning household members aged 19 to 34 with taxable salary income of 50 million KRW or less during the tax period. The payment limit increases from 500,000 KRW to 1,000,000 KRW per month, and the annual interest rate rises from a maximum of 4.3% to 4.5% within the 50 million KRW limit. Existing subscribers of the youth preferential subscription account will be automatically converted to the new product. One withdrawal is allowed for the purpose of paying the contract deposit so that the account can be used as a deposit account even after winning the subscription.
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