Source: Penn IUR Publication

Date Published: 11.01.2023

Link: A Comparative Study of International Financial Models to Increase Long-term Rental Housing Supply in South Korea

This policy brief examines how Germany’s two-century-old Pfandbriefe covered bond system could be adapted to expand South Korea’s long-term rental housing market for middle-income households. The authors assess the feasibility of social covered bonds, an ESG-aligned variant for financing affordable rental units, by reviewing German historical housing regulations, market conditions, and covered bond frameworks. Germany’s strong tenant protections, decentralized land-use governance, and conservative bond regulations offer a stable model. The study contrasts South Korea’s homeownership-focused policies and existing covered bond use for home loans, highlighting opportunities for the Housing and Urban Guarantee Corporation (HUG) to leverage guarantees and ICMA social bond principles. The brief recommends deeper research into tailoring covered bond legislation, valuation methods, and oversight mechanisms to Korea’s regulatory environment.