Interior of the long-term general private rental housing 'Administrative Town Doosan We’ve The Class' located in Cheongdang-dong, Cheonan-si, Chungcheongnam-do
As interest rate hikes and downward trends in housing prices become visible, the value of rental housing, which has been relatively overlooked in the real estate market, is rising. Private companies are improving product competitiveness by applying specialized designs and high-end community facilities, while the government is encouraging the activation of rental housing through unprecedented benefits.
On the 29th, the Ministry of Land, Infrastructure and Transport announced that it will start a public contest for 'Theme-type Purchased Rental Housing' from August 31 to supply customized purchased rental housing that provides diverse residential services to tenants.
Theme-type purchased rental housing is a new form of public rental housing that combines the advantages of public purchased rental housing with various types of residential services, tenant-customized housing, and shared spaces typical of private housing. Residence is guaranteed for up to 20 years at rent less than half of the market price.
The contest project to be promoted this time is a total scale of 2,000 units and will be subdivided into three methods.
First, the planning and operation method, which will be contested for about 1,000 units, is a type where private entities freely propose themed housing, which is constructed under a public purchase contract method, and private entities provide specialized services to tenants.
The operation consignment method (about 312 units) is a type where operation themes for newly purchased houses are freely proposed by private entities and selected as housing operation institutions. This is an easy method that allows startups related to residential services without construction experience to participate, and a method to select one operator for multiple buildings’ purchased rental operations is also introduced to foster startups through economies of scale.
The specific theme method (about 650 units) is a type where themes are pre-planned with central government agencies, universities, etc., which provide specialized residential services, and customized housing is purchased from private construction companies.
Kim Hong-mok, Director of Housing Welfare Policy at the Ministry of Land, Infrastructure and Transport, said, "The goal is to provide branded public rental housing that combines private creativity, autonomy, and high-quality residential services through the theme-type purchased rental contest project."
The private rental housing market is also popular. Recently, there is a growing perception that private rental housing, equipped with specialized designs, high-end finishing materials, and various community facilities, is comparable to private sale apartments.
Private rental housing is rental apartments built by private construction companies where residents can live for up to 10 years, with rent deposit and rent increase rates limited to 5% or less annually, reducing the burden of housing costs. Additionally, there is no burden of various holding taxes such as property tax, acquisition tax, and comprehensive real estate tax, and these units are not counted toward the number of houses owned.
Moreover, when large construction companies participate, the product competitiveness is excellent due to long-standing construction know-how, and the brand recognition adds further advantages. In fact, private rental housing supplied as branded complexes has gained high popularity with differentiated product competitiveness.
‘Hillstate Indeokwon,’ sold in Uiwang-si, Gyeonggi-do in March, provided storage rooms in the basement for tenants to separately store bulky items and maximized storage space by offering dressing rooms and pantries within units. The complex recorded a high competition rate of 231.8 to 1, with 80,892 applications for 349 units. ‘The Sharp Primo Seonghwang,’ sold in Gwangyang-si, Jeollanam-do in January, recorded an average competition rate of 117 to 1 and a maximum of 715 to 1.
An industry official said, "Recently, as large construction companies participate in the private rental housing market, the previously lacking aspects have been supplemented, transforming into comfortable residential spaces with competitiveness comparable to private sale complexes. Along with the advantage of safe residence at reasonable costs compared to surrounding market prices, it is expected that demand will continue."
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