Officetel and Houses Over 900 Million Won Also Eligible... Housing Pension Criteria to Change (Comprehensive)

Residential officetels also included in housing pension eligibility
Housing pension subscription limit changed from market price 900 million KRW to official price 900 million KRW

[Asia Economy Reporter Park Sun-mi] A bill to ease the upper limit of the house price eligible for the Housing Pension from the current market price of 900 million KRW to the official assessed price of 900 million KRW is passing the National Assembly. Since the range of house prices eligible for the Housing Pension was expanded from 600 million KRW to 900 million KRW in October 2008, the housing price standard, which had never changed, is being raised, and it is expected that more households will be included in the eligible range.

According to political and financial circles on the 24th, at the full meeting of the Political Affairs Committee held at the National Assembly in Yeouido on the 25th of this month, a bill to amend the Housing Finance Corporation Act, which includes residential officetels in the Housing Pension target and changes the upper limit of Housing Pension subscription from a market price of 900 million KRW to an official assessed price of 900 million KRW, will be put to a vote.

The office of Kim Byung-wook, the ruling party secretary of the National Assembly Political Affairs Committee, said, "At the first subcommittee meeting for bill review of the Political Affairs Committee held earlier, several bills to amend the Housing Finance Corporation Act proposed by various lawmakers were discussed, and the contents jointly proposed by Representative Kim and Shim Sang-jung of the Justice Party were merged and passed."

Kim Byung-wook, Park Sung-joong, and Shim Sang-jung Propose Amendments to the Housing Finance Corporation Act

At the first subcommittee meeting for bill review held on the 22nd, bills to amend the Housing Finance Corporation Act proposed by Kim Byung-wook, Park Sung-joong, and Shim Sang-jung with slightly different contents were intensively discussed. Although the details differ slightly, the purpose is the same: to relax the eligibility requirements so that more people can join the Housing Pension and enjoy its benefits.

Representative Kim proposed raising the eligible house price for Housing Pension subscription from the existing market price of 900 million KRW to the official assessed price of 900 million KRW and adding a trust method to the collateral acquisition method of the Housing Pension so that the Housing Pension can be automatically inherited by the spouse after the subscriber's death.

He also proposed allowing vacant houses to be rented out to expand the base and security of Housing Pension subscriptions. Representative Shim proposed a bill to allow residents of residential officetels to subscribe to the Housing Pension. Currently, residential officetels, which are quasi-housing not included in the Housing Act's definition of housing and thus excluded from Housing Pension support, should be adjusted to be eligible housing for the Housing Pension to alleviate the housing burden of the elderly living in officetels.

It was confirmed that the proposal by People Power Party Representative Park to completely remove the upper limit on house prices was discussed but ultimately not adopted.

Background for the Flexibility in Relaxing Housing Pension Eligibility Requirements?

The Housing Pension is a system where people aged 55 or older can receive a lifelong fixed amount as a pension (loan) by pledging their house as collateral. For example, if a 60-year-old subscribes to a lifelong payment type Housing Pension using a house with a market price of 500 million KRW as collateral, they can live in the house and receive 1,039,000 KRW monthly.

The bill to relax the Housing Pension eligibility requirements was also proposed in the 20th National Assembly but was not deeply discussed. However, as apartment prices have continued to rise recently, dissatisfaction has grown that the existing Housing Pension eligibility criteria do not reflect reality, leading both ruling and opposition parties to recognize the need for change.

The Financial Services Commission has also agreed with the purpose of the amendment, noting that the upper limit on the house price eligible for the Housing Pension subscription (market price of 900 million KRW) has remained unchanged for over ten years, and the number of households wanting to subscribe but unable to due to rising house prices is increasing. The median price of apartments in Seoul has already exceeded 900 million KRW. More than half of Seoul apartments are classified as high-priced housing, making them ineligible for the pension.

According to the Housing Finance Corporation, the number of Housing Pension subscriptions recorded 5,124 cases from January to June this year.

It has remained stagnant annually with 10,308 cases in 2016, 10,306 in 2017, 10,237 in 2018, and 10,982 in 2019. Since April this year, the subscription age for the Housing Pension was lowered from 60 to 55, expanding the eligible range by about 1.15 million households, but the actual number of subscriptions from April to June this year was 2,737, showing little difference compared to 2,660 cases in the same period last year.