Landlords, exporters given financial breaks by government

Economy

Published: 04 Jul. 2023, 14:12 Updated: 04 Jul. 2023, 15:36

Landlords, exporters given financial breaks by government

President Yoon Suk Yeol, right, and Finance Minister Choo Kyung-ho enter the Blue House in central Seoul on Tuesday to attend a meeting where the minister briefed the president about economic policy directions. [YONHAP]

The Korean government will loosen lending requirements for landlords while extending financial support and tax breaks for exporters.

Weak exports, signs of improvement in inflation and consumer spending have encouraged the move, announced by The Ministry of Finance and Economy on Tuesday.

The ministry announced its new policy directions for the rest of the year while downgrading its projection for this year’s gross domestic product growth to 1.4 percent from the previous 1.6 percent.

A key change was made from lending regulation for a certain type of loan when a landlord borrows money to repay a deposit in a jeonse transaction.

The landlords will be subject to the 60 percent ceiling of debt to income (DTI) ratio starting the end of July for one year. This means the amount of annual principal and interest rate obligations for the loan they apply for cannot be over 60 percent of their annual incomes.

Previously, they came under the debt service ratio (DSR) of 40 percent which prohibited the combined amount of all debt being servicing from surpassing 40 percent of their incomes.

To further stabilize the housing market, the ministry will also spearhead its selection process of new towns.

It will also provide a total of 184 trillion won ($141 billion) of favorable loans for small-and-medium sized companies with interests in selling their products and services abroad in the second half of the year.

BY PARK EUN-JEE [park.eunjee@joongang.co.kr]