Gangnam Area to Promote Early Sale of 1,500 Public Rental Housing Units After 10 Years

Two Appraisal Corporations Selected Directly by Residents
Sale Prices Expected to Be Set Below Market Value

(Photo by Yonhap News)

[Asia Economy Reporter Moon Jiwon] The 10-year public rental apartments supplied in the Gangnam area of Seoul are expected to be converted to early sales to a considerable extent.

According to the Korea Land and Housing Corporation (LH) on the 11th, 1,488 units of apartments and urban lifestyle housing supplied as 10-year public rentals in the three Gangnam districts are preparing for early sale conversion.

The 10-year public rental apartments are a form of public rental where tenants live by renting for 10 years and can purchase the unit afterward. However, after 5 years of occupancy, residents may negotiate with suppliers such as LH to receive early sale conversion.

Initially, LH had refused early sale conversion of the 10-year public rentals. The sale price for the 10-year rental is determined by the arithmetic average of appraisals from two appraisal firms, and this price is likely to increase over time along with rising housing prices.

However, as the controversy over the sale price calculation intensified among residents, LH and others appear to have shifted toward early sale conversion.

In fact, in areas like Pangyo and Bundang, many residents complained that the sale price was too high when it was time to purchase after completing the 10-year rental period. Some even demanded changes to the sale price calculation method.

Accordingly, a total of 1,242 units in Gangnam-gu will undergo early sale conversion. These include Gangnam 7 Complex (680 units) and Gangnam 5 Complex (419 units) of 10-year public rental apartments supplied in the Segok-dong Bogeumjari Housing District, and Gangnam 8 Complex (96 units) of urban lifestyle housing.

In Seocho-gu, 202 units of Seocho 4 Complex supplied in the Seocho Bogeumjari District will be converted early, and in Songpa-gu, 44 units of urban lifestyle housing are being pushed for early sale conversion.

Gangnam-gu and Seocho-gu plan to allow residents to directly select the two appraisal firms that form the basis for sale price calculation. The procedure for selecting appraisal firms is not clearly stipulated in related laws, so local governments are known to have considerable discretion.

If appraisal firms chosen directly by residents conduct the evaluations, there is a high possibility that the sale price will be set much lower than the market price.