[Beginner's Guide to Renting] Public Rental Housing Now Available in 30-Pyeong Units?… Should We Wait for 'Junghyung Rental'?

11·19 Jeonse Measures Introduce 'Medium-Sized Public Rental Housing'
Maximum Rental Housing Area 60㎡ → 85㎡

Occupancy Up to 150% Median Income... Dual-Income 180%
4-Person Household Annual Income Up to 100 Million KRW Eligible

60% Priority Supply to Low-Income Groups... Rent Differentiated by Income
Occupancy Likely Possible Only After 2025

[Asia Economy Reporter Lee Chun-hee] When you become a real estate reporter, you often get unexpected KakaoTalk messages from friends. "How do I apply for a housing subscription?" "What is first priority?" For the 2030 'Burin-i (Real Estate + Beginner)' who only have subscription savings accounts created by their parents when they were young, I am trying to create a guide.

The government’s 'Support Measures for Housing Stability for Low-income and Middle-class' (11·19 Jeonse Measures) announced on the 19th included 'medium-sized public rental housing.' Unlike other short-term measures introduced to resolve the current Jeonse crisis, medium-sized public rental housing is a system that allows middle-class households to move into rental housing from a long-term perspective. So, let’s find out who can move in and what the actual conditions are like.

Now 84㎡ Also Supplied in Public Rental Housing... 4-Person Household with Annual Income Over 100 Million KRW Can Move In

Currently, public rental housing is supplied only in units of 60㎡ or less. Considering that 59㎡ is generally considered suitable for 2-3 person households and 84㎡ for 3-4 person households, only sizes that might be avoided by households with a certain income level have been supplied, even if they were given the opportunity to move into public rental housing.

Accordingly, through the Jeonse measures announced on the 19th, the government proposed supplying 63,000 medium-sized rental housing units of 60-85㎡ by 2025 under the banner of 'high-quality lifelong housing.' These will be supplied through 53,000 newly built integrated-type public rental housing units and 10,000 purchased rental housing units.

The government plans to enhance housing stability by allowing residents to live for up to 30 years if they meet income and asset requirements. Even if income and asset requirements increase and exceed the eligibility criteria, as long as the household remains without homeownership, they can continue to live by paying rent similar to the nearby market price. Even after the 30-year residency period, it is expected that residence can continue in the same way.

Income requirements will also be raised. Initially, the integrated-type public rental housing was expected to apply a standard of up to 56㎡ and 130% of the median income. However, with the inclusion of medium-sized rental housing supply plans, the size increased to a maximum of 85㎡, and the income requirement was raised to 150% of the median income. This corresponds to about 5.81 million KRW per month for a 3-person household and 7.12 million KRW per month for a 4-person household. If both spouses work, the standard rises to 180%, which means 6.97 million KRW per month for a 3-person household and 8.55 million KRW per month for a 4-person household. For a 4-person household, this means that households with an annual income of up to 100.58 million KRW can move in.

The asset requirement remains the same as the current standard, which is below the average net asset value of the 3rd to 5th quintiles (28.8 million KRW as of 2020). However, the car value standard is expected to be raised slightly from the current 25 million KRW to 35 million KRW.

In addition, the government plans to improve housing quality, which has been cited as one of the reasons middle-class households hesitate to move in. Major finishing materials such as door locks and flooring will be upgraded to the level of sale housing, and companies with defective materials will be penalized or excluded from procurement.

Also, among existing public rental housing residents, there have been many cases where residents want to live in larger homes. The government plans to set allowable living areas by household size and basically supply housing according to that area. However, if households with fewer members want to live in larger units, they will be allowed to move in by paying a rent surcharge. For example, for a 3-person household, the basic supply is for units between 41-70㎡, but to live in a larger unit, rent will be surcharged. Therefore, the newly added medium-sized public rental housing of 60-84㎡ will only be available to households of 3 or more people, and 1-2 person households are expected to be ineligible.

Considering the Purpose of 'Supporting Low-income and Vulnerable Groups'... 60% Priority Supply, Different Rent by Income

However, there are many criticisms that the government is neglecting the original purpose of public rental housing, which is 'supporting low-income and vulnerable groups,' and is undermining policy intentions for the sake of solving the immediate Jeonse crisis with these medium-sized public rental housing units. To prevent such side effects, the government plans to introduce priority supply and income-linked rent systems.

Priority supply is a system that allocates 60% of the total supply to households with income below 100% of the median income (3-person household monthly income 3.87 million KRW, 4-person household 4.75 million KRW), who are eligible for permanent and national rental housing. This includes recipients of social benefits, displaced persons, national veterans, multi-child families, disabled persons, and non-housing residents. Unlike general supply, priority supply will be allocated based on a point system, with lower-income households receiving higher scores to prioritize their admission.

The income-linked rent system sets different rent rates relative to market prices according to each resident’s income level. Households below 100% of the median income will pay rent at up to 65% of market price, those between 100-130% will pay 80%, and those between 130-150% will pay 90% of market price.

Actual Move-in Expected Only After 2025

However, medium-sized public rental housing will not be supplied immediately. It will take considerable time until actual supply. The government plans to supply 53,000 newly built medium-sized rental units by 2025. The plan is to increase supply continuously: 1,000 units in 2021 → 6,000 units in 2022 → 11,000 units in 2023 → 15,000 units in 2024 → 20,000 units annually from 2025 onward.

However, the 'supply timing' mentioned here refers not to the usual move-in date, groundbreaking, or sale date, but to the 'project approval' date. The 1,200 units in six integrated public rental pilot complexes that the government announced will be approved by next December, and the earliest groundbreaking sites are 400 units in Seongnam Nakseong and 100 units in Daejeon Industrial Complex in 2022. In other words, the actual supply date when residents can move into medium-sized rental housing is expected to be no earlier than after 2025.

The location is also somewhat uncertain. For newly built medium-sized rental housing, it is considered difficult to supply in Seoul city, which is the core area of the current Jeonse crisis. In fact, all six pilot complexes announced by the government are limited to Gyeonggi and Daejeon regions.

However, since the government is promoting plans to redevelop and high-density develop old public rental housing in areas such as Seoul Junggye and Gayang, there is still a possibility of supply in prime locations in Seoul. Also, although not in Seoul city, there are plans to supply a large number of medium-sized public rental housing units in the 3rd New Towns.