"Owners of Homes Worth 1.2 Billion Won Can Apply for Housing Pension in Advance Starting Today"

Pre-consultation and Application Available from December 1
Over 80,000 Households Using Housing Pension as of End of November

[Asia Economy Reporter Sunmi Park]Mr. and Mrs. A (husband 60 years old, wife 57 years old) were living on the husband's sole income when the husband recently had to retire due to difficulties at his company caused by COVID-19. Recently, their house price rose from 800 million KRW to 1 billion KRW, but they cannot sell the house immediately. Several years remain until they can receive their national pension, and since the house price exceeds 900 million KRW, it is difficult to even enroll in the Housing Pension, leaving them feeling at a loss.

Mr. and Mrs. B (husband 58 years old, wife 54 years old) heard in April this year that the minimum age for Housing Pension enrollment was lowered to 55 and visited the Korea Housing Finance Corporation to apply. However, they were told that since their residence is classified as an officetel, enrollment is currently not possible.

Due to a legal amendment, from the 1st of this month, both Mr. and Mrs. A, who own a house valued at 1 billion KRW, and Mr. and Mrs. B, who live in an officetel for residential purposes, can apply for the Housing Pension.

The Korea Housing Finance Corporation (HF) announced on the 1st that following the passage of the amendment to the ‘Korea Housing Finance Corporation Act’ in the National Assembly plenary session last November, those residing in houses with a publicly announced price of 900 million KRW (market price around 1.2 to 1.3 billion KRW) or less, or in officetels for residential purposes, can now receive pre-consultation and make reservation applications for the Housing Pension.

The publicly announced price can be checked on the ‘Real Estate Public Price Informer’ website, and the most recent publicly announced price as of the Housing Pension application date is used to determine whether the price is below 900 million KRW. However, in cases where there is no publicly announced price for officetels, the standard market price used for property tax calculation, market price, or appraisal value is applied in order, to determine eligibility for the Housing Pension. If the eligible housing price exceeds 900 million KRW market price, the monthly payment for the Housing Pension is calculated with a cap at 900 million KRW market price.

Additionally, for officetels used for residential purposes, the Housing Pension applicant must have their resident registration transferred to the officetel and actually reside there, with residential facilities such as a kitchen. The officetel must be listed as a house on the ‘Local Tax Itemized Taxation Certificate’ and be subject to residential property tax. For example, a 300 million KRW officetel used for residential purposes would provide a monthly lifelong payment of 458,000 KRW for a 60-year-old and 736,000 KRW for a 70-year-old.

The Housing Finance Corporation also plans to introduce the ‘Trust-type Housing Pension’ and ‘Seizure Protection Account’ around June next year as part of the Act amendment.

The cumulative number of Housing Pension subscribers exceeded 80,000 households as of the end of November this year. The average house price was 303 million KRW, and 80.3% of the houses were 85㎡ or smaller. Furthermore, the average monthly payment was 1,026,000 KRW, and the average age was 72.2 years, with those in their 70s accounting for 47.5% and those in their 60s 34.1%. Among Housing Pension recipients, there are currently 71 customers aged 100 or older.

President Lee Jeong-hwan said, “We have established a pre-consultation application procedure for the Housing Pension so that people suffering from prolonged COVID-19 hardships can use the Housing Pension more quickly. Through this, as soon as the amended Act is implemented, we plan to proceed with Housing Pension enrollment and payment procedures so that necessary living funds can be received as soon as possible, even by a single day.”