HUG Targets 15 Trillion Won for New Lease Trust Program

Korea Housing & Urban Guaranty Corporation committed 1 trillion won to a new lease trust model this month. The fund aims to stabilize tenant deposits and restore confidence in the non-apartment rental sector.

The agency targets an annual volume of 15 trillion won in jeonse deposits held in trust. This scale would effectively supply roughly 93,000 homes to the market through guaranteed financing.

Deposit mechanics shift risk

Tenants place lump-sum deposits with the state agency instead of landlords directly. This structure removes the risk of non-refund while allowing landlords to access capital for operations.

The program converts monthly rent arrangements into lump-sum contracts to reduce tenant cash flow pressure. Landlords receive guaranteed income even during unit vacancy periods of up to two months.

Guarantee limits face potential increase

HUG is reviewing a rise in mortgage guarantee caps from 60% to 70% or 75%. This change would let operators borrow more against appraised values despite deposit restrictions.

Operators currently cannot spend deposited funds directly on construction or purchases. Higher guarantee ratios would ease their funding burden while HUG absorbs the principal loss risk.

Market participation remains voluntary

Eligibility covers homes valued up to 2 billion won regardless of housing type. Income and asset limits do not apply, though existing liens must be cleared for participation.

The Seoul Economic Daily notes that verification of prices begins in November. Move-ins are scheduled for January, with the revitalization fund registering in February.