Sale Conversion Rental Housing
Initial Deposit 10% Misinterpreted as
LTV 90%
Real Estate Special Committee
"LTV 90% Under Review"
[Asia Economy Reporter Koo Chae-eun] The Democratic Party of Korea has stated that reports suggesting they are discussing raising the Loan-to-Value ratio (LTV) to 90% for the homeless and genuine homebuyers are "misrepresentations."
On the 18th, Yoon Ho-jung, the floor leader of the Democratic Party, appeared on KBS's Choi Kyung-young's "Choi Kang Sisa" and dismissed the reports, saying, "The contents of the 'Anyone's House' project have been distorted and reported." Yoon explained, "Party leader Song Young-gil proposed the 'Anyone's House' project during the primary debate, which allows tenants to live in rental housing for about 10 years and then receive ownership after 10 years. He emphasized supplying rental housing where one could own the house after 10 years by paying only 10% of the housing price upfront. When asked if the remaining 90% would be loans, he responded by mentioning LTV."
According to Yoon's explanation, Song's 'Anyone's House' project does not mean "you can buy a house with 10% funds and 90% bank loans," but rather that tenants can move into rental housing by paying only the initial 10% deposit of the pre-sale apartment. In reality, 'Anyone's House' is rental housing where residents pay 10% of the sale price, live there for 10 years, and then have the option to convert to ownership at the original sale price. Song introduced this facility during his tenure as mayor of Incheon.
However, despite Yoon's explanation, confusion surrounding the 90% LTV appears unlikely to subside easily. This is because no clear stance has emerged from the Real Estate Special Committee on this matter. Kim Jin-pyo, chairman of the Real Estate Special Committee, told reporters after a meeting on the 12th, "We need to review the 90% LTV relaxation proposal further." When asked if it was under consideration, he replied, "Yes."
Meanwhile, the Financial Services Commission and other government bodies are discussing LTV relaxation not as a blanket "90%" but rather within the 50-60% range (in speculative areas and overheated speculation zones) for specific households. Currently, the LTV is 40% (for houses under 900 million KRW in speculative and overheated speculation zones) to 50% (in regulated areas), and there is a plan to increase it by 10-20 percentage points for youth and newlyweds.
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