MOLIT Extends Interest Subsidies for Public Redevelopment to Relocation Loans; Up to 300 Million Won

[Financial News] Interest subsidies previously applied to project-cost loans for public redevelopment will be extended to residents' relocation loans. Single-home owners can receive interest support of up to 2 percentage points on basic relocation loans equivalent to 70% of jeonse and other deposits, capped at 300 million won.
On the 1st, the Ministry of Land, Infrastructure and Transport (MOLIT) announced that Korea Housing & Urban Guarantee (HUG), Korea Land and Housing (LH), Seoul Housing & Urban Development (SH), and Gyeonggi Housing & Urban (GH) had revised the "Public Redevelopment Project Interest Subsidy Agreement."
The measure follows the housing supply acceleration measures announced on August 13. It is intended to speed up public redevelopment projects and ease the burden of contribution payments by reducing residents' relocation burden and project financing costs.
Public redevelopment interest subsidies are a system under which part of the interest on project-cost loans is supported through the Housing and Urban Fund. Since four agencies signed an agreement in May 2023, the program has been applied to project-cost loans for 35 sites.
The support covers up to 2 percentage points of the portion of the loan interest rate exceeding 1.8% per year. Under the revision, newly designated sites—including three recently selected as public redevelopment candidate sites—will also become eligible, in addition to the existing 35 sites.
Relocation loan support applies to loans taken by single-home owners to move their residence or return rental deposits to tenants. Loans taken by owners of multiple homes are excluded, in line with the policy's purpose of reducing the relocation burden on residents who live in their own homes.
The support is capped at 70% of jeonse and other deposits, or 300 million won, per rights holder. Eligible loans are those obtained from commercial and regional banks, Korea Development Bank (KDB), National Agricultural Cooperative Federation (NACF), the National Federation of Fisheries Cooperatives, and other financial institutions that handle HUG loan guarantees.
Interest support continues from the date the loan is disbursed through the 60th day of the designated move-in period. A single-home owner who borrows 300 million won in basic relocation funds at an annual interest rate of 4.8% can save approximately 6 million won in annual interest when the maximum 2-percentage-point support is applied. If three years pass between relocation and move-in, the savings would total approximately 18 million won.
Yoon Young-joong, Director General for Housing Redevelopment Policy at MOLIT, said, "The revised agreement has laid the groundwork for public redevelopment residents to relocate with a reduced interest burden," adding, "We will continue to work with relevant agencies to accelerate public redevelopment projects and actively support efforts to ensure that housing supply in urban areas becomes visible at an early stage."
[email protected] Choi Ga-young Reporter