Ministry of Land, Infrastructure and Transport: "Occupancy Obligation for Housing under Price Ceiling System Does Not Significantly Impact Jeonse Market"

[Image source=Yonhap News]

[Asia Economy Reporter Dongwoo Lee] The government actively clarified concerns that imposing a 2-5 year residency obligation on housing subject to the metropolitan area price ceiling system (Bunsangje) could exacerbate the rental housing shortage.

On the 17th, the Ministry of Land, Infrastructure and Transport stated in a press release that "imposing a residency obligation on Bunsangje housing does not have an immediate significant impact on the rental market."

Among the metropolitan area Bunsangje housing, those supplied on private land will have a mandatory residency period of 2 or 3 years depending on the sale price level, and public land housing will have a 3 or 5 year residency obligation, according to the revised Housing Act set to take effect on the 19th.

There have been analyses suggesting that because buyers must fulfill the residency obligation, they will not be able to rent out their homes, leading to a decrease in the supply of new rental housing.

The Ministry explained that the residency obligation applies only to applications for resident recruitment submitted after the 19th, and considering the housing construction period, the actual move-in time will be around 2024 to 2025. With the full effect of government housing supply policies such as the 2·4 measures, the large volume of housing supply will limit the impact on the rental market.

The Ministry emphasized that Bunsangje was introduced to alleviate the burden on real demanders in purchasing homes by supplying housing to non-homeowners at prices lower than surrounding market prices.

The Ministry added, "Since non-homeowner household members have priority in purchasing Bunsangje housing, there are not many buyers who can immediately rent out their homes," and "the existing rental housing previously occupied by non-homeowners who purchased Bunsangje housing will be supplied back to the market, so there is no change in the total volume of rental housing overall."