The Housing and Urban Guarantee Corporation (HUG) is set to improve the review standards for project financing (PF) guarantees for local housing projects. The agency plans to implement an age adjustment rate for projects in areas where comparable new apartments are scarce, making it difficult to establish appropriate sale prices.
On October 15, HUG President Choi In-ho addressed concerns raised by Democratic Party lawmaker Jo In-cheol during a National Assembly audit, stating, "We are taking measures to improve the review standards for PF guarantees, which have been criticized for regional bias."
Currently, HUG evaluates the appropriateness of the expected sale prices proposed by developers during the PF guarantee review process. However, it has been pointed out that in many local areas, the lack of comparable new buildings often leads to established apartments being used as the basis for pricing.
This situation can result in the proper value of new homes not being adequately reflected, leading to lower assessments of project viability and difficulties in utilizing PF guarantees.
Lawmaker Jo emphasized the need for a comprehensive review of the overall assessment process, suggesting the establishment of a specialized review body.
In response, President Choi stated, "We plan to introduce an age adjustment rate to ensure that developers are not at a disadvantage due to difficulties in establishing appropriate sale prices, which could prevent them from utilizing PF guarantees."
HUG is considering applying an age adjustment rate to reflect the value differences between existing and new homes in the pricing assessment. This initiative aims to improve the review conditions for PF guarantees in local projects where comparable new buildings are lacking.
However, specific details regarding the adjustment rate, applicable targets, and review methods have yet to be disclosed.
As local housing projects face challenging funding conditions, the effectiveness of this regulatory improvement in expanding the use of PF guarantees and advancing projects remains to be seen.
President Choi noted, "We are currently working on revising the regulations with the aim of implementing changes by November."
* This article has been translated by AI.
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