Housing Builders Association: "LH Private Participation Projects Should Consider Mid-Sized and Small Construction Companies"

The Korea Housing Builders Association issued a statement on the 7th welcoming the government's newly announced measures to expand housing supply, describing them as policies that will support the rapid and smooth provision of housing.

The association stated, "By setting an upper limit on the burden rate for infrastructure contributions when changing zoning areas, predictability regarding local governments' demands for such contributions will be ensured." It added, "Rational standards will be established to address excessive demands for school facility contributions that lack legal basis, which is expected to improve unreasonable practices that have hindered housing projects."

The association went on to say, "By including educational environment, disaster impact, and fire safety assessments in the scope of the integrated review under the Housing Act, the effectiveness of the integrated review will be enhanced. The establishment of a rapid permit support center within the Ministry of Land, Infrastructure and Transport is also expected to help resolve disagreements and disputes between local governments and developers, thereby shortening the permitting process." The association anticipated that these measures would improve business conditions.

Kim Yoonduk, Minister of Land, Infrastructure and Transport, is announcing measures to expand housing supply at the Government Seoul Office Building on the afternoon of the 7th. Photo by Yonhap News

The association also expected that measures such as expanding the guarantee scale of the Housing and Urban Guarantee Corporation (HUG), extending the relaxation of guarantee requirements, and broadening the scope of project financing (PF) guarantee bridge loan interest refinancing to five years would strengthen guarantee support for developers and enhance stability during project execution. They also viewed the concentrated supply of new purchase-lease units over the next two years, advance payments for land and early construction starts, as incentives. In addition, they predicted that providing purchase commitments for unsold public housing sites in the Seoul metropolitan area held by the private sector would help address sales risks.

The association stated, "However, when the Korea Land and Housing Corporation (LH) directly implements public housing site projects as contract-type private participation projects, there is concern that these projects may be dominated by large construction companies." They argued that sufficient consideration should be given to ensure that mid-sized and small construction companies can also participate. The association also emphasized that, when restricting mortgage loans for housing sales businesses, exceptions should be applied as needed to allow for project financing repayment and payment of construction costs.