Heku and Taiwan Jinlian promote reserve funds for continued construction to build a safety net for construction funds

Lin Yanmao (right), chairman of Hekuyin, and Gong Wenping, chairman of Taiwan Jinlian, jointly signed a memorandum of cooperation on the renewal of capital commitment business. (Provided by Hekuyin)

In order to improve the construction and completion safety of construction projects and protect the rights and interests of consumers, Heku Bank uses the existing trust management mechanism for dedicated construction funds, combined with the "continuation fund" system promoted by Taiwan Jinlian Asset Management Company, to assist qualified builders to establish additional sources of funds for renewal, strengthen the ability to continue construction projects, reduce the risk of project interruption, and provide people with more peace of mind when buying homes.

Hekuyin pointed out that in recent years, the country has continued to implement selective credit controls, coupled with the cooling of real estate market transactions, builders are facing challenges such as difficulty in raising funds and tighter financing conditions, and the market is increasingly paying attention to whether construction projects can be successfully completed. In particular, small and medium-sized builders with smaller capital scales are more susceptible to changes in the business cycle and financing environment. Once sales are not as good as expected, or are affected by factors such as rising construction costs and difficulty in capital allocation, there may be risks of cash flow contraction, project delays or even shutdowns, which will in turn affect the rights and interests of consumers of pre-sold houses.

The existing performance guarantee mechanism for pre-sale houses mainly focuses on price preservation. How to further strengthen the financial safety net during the construction process and reduce consumer disputes arising from suspension of construction due to funding issues has become an important issue for improving the housing market.

In view of this, Taiwan Jinlian relies on its experience in real estate asset management and debt processing to provide qualified builders with a reserve amount for application for renewal of construction. When the construction project faces unexpected funding gaps, it can immediately activate financial resources for renewal; Hekuyin uses trust management and earmarked funds to assist the continuous advancement of the construction project and increase the possibility of successful completion.

Hekuyin said that this mechanism reduces the financial pressure caused by slowing market sales, tightening financing environment and fluctuations in construction costs by increasing the source of construction funds. Compared with remediation after builders have run out of funds, the continuation reserve fund system has a more preventive function in advance. It not only helps small and medium-sized builders to steadily promote projects, but also reduces the risks of pre-sale house purchasers and original financing financial institutions, and establishes a mutually beneficial mechanism for builders, financial institutions and home buyers.

Hekuyin said that with the tightening of financial supervision and rapid market changes, financial institutions should not only provide financing services, but also fulfill their social responsibilities. Through the trust mechanism, we cooperate with Taiwan Jinlian to promote the renewal capital business, introduce bank capital management expertise into the construction project development process, and jointly strengthen the security and stability of the residential market.