The South Korean government will provide interest support for loans taken by residents relocating due to public redevelopment projects. Borrowing 300 million won at an annual interest rate of 4.8% could reduce annual interest payments by approximately 6 million won, amounting to about 18 million won over three years, according to government estimates.
On October 1, the Ministry of Land, Infrastructure and Transport announced a revision of the 'Public Redevelopment Project Interest Subsidy Agreement' with the Housing and Urban Guarantee Corporation (HUG), Korea Land and Housing Corporation (LH), Seoul Housing and Communities Corporation (SH), and Gyeonggi Housing and Urban Corporation (GH). This revision expands the support scope from project costs to include relocation loans.
This initiative is part of the government's follow-up measures to the 'Rapid Housing Supply Plan' announced in August, which aims to add over 230,000 housing units in the metropolitan area while streamlining redevelopment procedures and enhancing financial support.
The public redevelopment interest subsidy program supports up to 2 percentage points of the portion of the project loan interest rate that exceeds 1.8% from the Housing and Urban Fund. Introduced in May 2023, it currently applies to loans for 35 project sites.
With this revision, relocation loans taken by homeowners to move or return rental deposits to tenants will now be eligible for interest subsidies. However, multiple homeowners are excluded from this support.
Eligible loans can be up to 300 million won, covering 70% of the deposit for lease agreements. The loans must be obtained from financial institutions that handle HUG loan guarantees, including commercial banks, regional banks, the Industrial Bank of Korea, and agricultural and fisheries cooperatives. Interest support will apply from the loan execution date until 60 days after the designated move-in period.
If a homeowner borrows 300 million won at an annual interest rate of 4.8%, they could receive a maximum subsidy of 2 percentage points under the existing criteria, reducing their annual interest burden by 6 million won. Assuming the relocation process takes three years, the total savings would be approximately 18 million won.
The range of supported project sites will also expand. In addition to the existing 35 locations, three newly selected public redevelopment candidate sites will also be eligible for interest subsidies.
The Ministry of Land, Infrastructure and Transport expects that lowering financial costs during the relocation phase will facilitate smoother moves for residents and accelerate the public redevelopment process. Residents can check the application process for interest subsidies and the eligibility of specific project sites through the respective project implementers, LH, SH, and GH.
Yoon Young-jung, Director of Housing Maintenance Policy at the Ministry of Land, Infrastructure and Transport, stated, “A foundation has been established for residents of public redevelopment projects to reduce their interest burden and relocate. We will support efforts to accelerate the public redevelopment process, making housing supply in urban areas visible at an early stage.”
* This article has been translated by AI.
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