Total 18,000 Units from 2021 to 2022
5,000 Units in Seoul... Purchase Price 600 Million KRW
Applicants Without Housing Eligible
Random Draw If Competition Occurs
Minister of Land, Infrastructure and Transport Kim Hyun-mi is visiting a purchased rental housing located in Eunpyeong-gu, Seoul, on the 22nd of last month, inspecting the interior. (Photo by Yonhap News)
[Asia Economy Reporter Moon Jiwon] The government will supply 18,000 public jeonse housing units over the next two years to stabilize the jeonse market. In the first half of next year, 3,000 units (1,000 in Seoul) are scheduled to be supplied nationwide. Tenants will be selected from among non-homeowners regardless of income, and if there is competition, a random lottery will be held.
The Ministry of Land, Infrastructure and Transport announced on the 2nd that, according to the 'Support Plan for Housing Stability for Low-income and Middle-class' announced on the 19th of last month, 18,000 public jeonse housing units will be supplied from 2021 to 2022. It plans to supply 9,000 units each in the next two years.
Public jeonse housing refers to newly built multi-family and multi-unit houses, officetels, and other housing with spacious areas and pleasant living environments in urban areas, purchased by public housing operators and temporarily supplied to middle-class households.
The average purchase price per unit is set at 600 million KRW in Seoul, 400 million KRW in Gyeonggi and Incheon, and 350 million KRW in other regions. In Seoul, housing prices in high-priced areas range from 700 million to 800 million KRW, while in lower-priced areas, purchases are possible in the 400 million to 500 million KRW range.
The government expects that by raising the purchase price this time, it will be able to secure medium-sized housing with three or more rooms, which are in high demand in urban areas.
Tenants will be selected from non-homeowner households without income or asset criteria. If competition arises, the final tenants will be selected through a random lottery. Selected tenants can live for up to six years at less than 90% of the market jeonse price.
Public jeonse housing actively utilizes private purchase agreements to secure high-quality housing, so tenants can live in houses built with materials and interiors used in sale housing.
Common areas will be equipped with closed-circuit (CC) TV, seismic design, fire detectors, unmanned parcel lockers per building, and noise prevention standards between floors, creating a safe and pleasant living environment.
The government will conduct thorough quality inspections five times before the final purchase to ensure tenants can live in high-quality housing.
In the first half of next year, 3,000 units nationwide (1,000 in Seoul) and in the second half, 6,000 units nationwide (2,000 in Seoul) will be supplied.
Korea Land and Housing Corporation (LH) will hold the first briefing session from the 10th to the 14th for operators with purchase agreement experience, and a second briefing session for new operators will be held later this month.
The government will also provide incentives to encourage more private construction companies to build and supply public jeonse housing.
First, starting next year, construction funds will be supported at low interest rates in the 1% range through the Housing and Urban Fund. Existing purchase agreement operators had to bear high interest rates of around 5% by raising construction funds from commercial banks.
Companies that supply many public housing units through purchase agreements will receive preferential supply and additional points in bidding for apartment sites in new public land developments such as the 3rd New Town.
Also, when constructing public rental housing through purchase agreements, sellers of the land will receive a 10% reduction in capital gains tax, and private construction companies that purchase land and build housing will receive a 10% reduction in acquisition tax.
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