The Seoul Metropolitan Government has proposed raising the loan-to-value ratio for relocation-fund loans from 40% to 70% [1].
This move aims to remove financial bottlenecks that have stalled urban renewal. By increasing the amount residents can borrow to relocate during construction, the city hopes to improve the business viability of large-scale redevelopment and reconstruction projects.
Mayor Oh Se-hoon led the initiative to submit 10 amendment items to the national government [2]. These proposals are designed to reduce the regulatory burden on urban maintenance projects and speed up the delivery of new housing units.
Currently, the loan-to-value (LTV) limit for relocation-fund loans is restricted to 40% [1]. This ceiling has made it difficult for residents to secure the necessary financing to move out of their homes while redevelopment occurs. The city is now requesting that this limit be expanded to 70% [3].
Reporter Lee Hyung-won of YTN said the proposal reflects a reality where redevelopment and reconstruction are unable to gain speed due to difficulties in procuring relocation funds [4]. The city believes that easing these specific financial constraints will allow projects to move forward more efficiently.
Beyond the LTV increase, the broader set of 10 amendments seeks to streamline the legal framework governing how these projects are approved and executed [2]. The city government is urging the central government to adopt these changes to revitalize the construction sector and address housing shortages in the capital.
“The city is now requesting that this limit be expanded to 70%.”
This proposal represents a strategic shift by the Seoul Metropolitan Government to prioritize housing supply over strict lending controls. By pushing for a higher LTV ratio, the city is attempting to lower the entry barrier for residents in redevelopment zones, potentially triggering a surge in project starts that were previously stalled by a lack of liquidity.
