[Ryu Taemin's Real Estate A to Z] Emerging Alternatives: Officetels vs. Dosi-hyeong Saenghwal Jutaek... What Are the Differences?

As Subscription Barriers Rise, Apartment Alternatives Emerge
Urban-Type Residential Housing Included in Housing Count... Subject to Acquisition Tax Surcharge
Loan Regulations Apply Equally to Apartments
Exclusive Use Rate 70-80% with Balcony Installation Possible, Offering Larger Usable Area

[Asia Economy Reporter Ryu Tae-min] With successive real estate regulations, soaring apartment subscription competition rates, and winning points... Alternative housing products such as officetels and urban-type residential housing are emerging as new options for home ownership amid these 'insurmountable' entry barriers. They are relatively free from regulations compared to apartments and, notably, can be purchased through a lottery system without a subscription savings account. However, it is important to consider that each product shows differences in taxes and loans depending on area and price.

Urban-type residential housing, introduced in 2009 to meet the housing demand from increasing 1-2 person households, refers to multi-family housing with less than 300 units and a net floor area of 85㎡ or less. Acquisition tax ranges from 1.1% to 3.5% depending on purchase price and area, making it relatively inexpensive. However, urban-type residential housing with a net floor area exceeding 20㎡ is counted as a housing unit, so if you already own a home, it is considered a two-home household and capital gains tax is increased.

Officetel pre-sale rights are not included in the housing unit count. Therefore, even if you own multiple houses, acquisition tax surcharges do not apply. However, acquisition tax on officetels is fixed at 4.6%. Although there have been criticisms about the high acquisition tax, recently, acquisition tax surcharges for multi-homeowners on apartments have increased up to 12% (for three or more homes), reducing the relative burden.

There are also differences in loan regulation applications. Urban-type residential housing located in speculative overheated districts is subject to the same loan regulations as apartments: 40% loan-to-value (LTV) for properties under 900 million KRW, 20% for those exceeding 900 million KRW, and 0% for those over 1.5 billion KRW. In contrast, officetels are subject to non-residential collateral loans, allowing up to 70% LTV.

Even with the same net floor area, measurement standards differ, causing differences in actual usable area between officetels and urban-type residential housing. Officetels with building permits granted before April 30, 2015, calculated net floor area based on the centerline of walls (wall thickness), effectively reducing usable area by half the wall thickness. This is because officetels are governed by the Building Act, unlike apartments and urban-type residential housing, which are governed by the Housing Act. However, officetels with building permits granted after April 30, 2015, calculate net floor area using the inner wall line (clear dimension), similar to apartments.

The near absence of balconies, which are provided as service areas not included in net floor area, also affects officetels. Urban-type residential housing typically offers expanded balconies, increasing usable area by as little as 25㎡ and up to 40㎡.

It is also important to note that the standards for sale area differ. Urban-type residential housing displays supply area, while officetels display contract area as the sale area. Supply area is the sum of net floor area (rooms, living room, kitchen) and residential common areas such as stairs and corridors. Contract area adds other common areas like basements and management offices to the supply area. This explains why officetels have a net floor area ratio of around 50%, lower than the 70-80% level of urban-type residential housing.