[Real Estate AtoZ] Now Even Multi-Homeowners Can 'Jubjub'... What Is Non-Sequential Subscription?

Editor's Note[Real Estate AtoZ] is a guide for those concerned about housing issues. We will concisely and easily provide real estate knowledge on how to buy and live well in a home.

[Asia Economy Reporter Ryu Taemin] The opportunity for 'non-priority subscription' (musunwi cheongyak), which had been exclusive to the homeless, is now opening up to multi-homeowners, drawing market attention. The Ministry of Land, Infrastructure and Transport announced on the 21st a draft amendment to the “Regulations on Housing Supply,” which includes a provision allowing anyone to apply for non-priority subscriptions regardless of the number of houses they own. This is a measure to resolve unsold units as the number of uncontracted units?those won in subscriptions but not contracted?has been increasing recently.

What Exactly Is Non-Priority Subscription?

Non-priority subscription, also called 'jupjup,' refers to the process of re-accepting subscription applications and selecting winners when someone cancels a contract or when a winner is disqualified after the main subscription. The key point is that unlike general subscriptions, you can apply without a subscription savings account (cheongyak tongjang). Even if you win in a non-priority subscription, there is no re-winning restriction that bans you from applying again for a certain period.

A characteristic of non-priority subscription is that the project owner cannot arbitrarily raise the sale price. Since approval from the local government head is required, units are often supplied at prices lower than market value. However, unlike general subscriptions, non-priority subscription opportunities do not arise for all apartment sales, so it is important to check announcements and sales schedules for non-priority subscriptions in complexes of interest.

Previously, only members of households without homes could apply for non-priority subscriptions. But since February this year, anyone can apply regardless of the number of houses they own.

How Is It Different from Reserved Unit Bidding?

A similar purchase method to non-priority subscription is 'reserved unit bidding' (boryuji ipchal). Reserved units are units left unsold in a redevelopment project to prevent cases such as omission of units for association members due to sales errors.

This is an obligation of the association, which must leave reserved units. Up to 1% of the total units can be reserved. Typically, the association sets aside about 10 to 20 units as reserved units before general sales. Reserved unit bidding can be participated in without a subscription savings account.

However, unlike non-priority subscription, reserved unit bidding is conducted through a bidding process rather than subscription. The association first sets a minimum bid price, and the highest bidder wins. Since bidding often occurs a few months before move-in, prices are mostly based on market value rather than the sale price.

When purchasing through reserved unit bidding, you can know the building and unit number in advance. Unlike general sales by lottery, you can specify the building and unit you want to bid on. Especially, reserved units are part of the association members’ allocation, so they often have good floor levels or directions. Additionally, services exclusive to association member units, such as free balcony expansion or application of premium finishing materials, are also available.

What Should You Be Careful About When Applying for Non-Priority Subscription or Reserved Unit Bidding?

Winning a non-priority subscription does not necessarily mean a successful investment. The existence of uncontracted units suggests that the sale price may be higher than market value or the location may not be favorable. Therefore, many cases occur where people apply indiscriminately without considering their own situation and conditions, but after winning, they cannot afford the costs and cancel the contract.

For example, in the case of 'Cantavil Suyu Palace' in Suyu-dong, Gangbuk-gu, Seoul, which conducted non-priority subscriptions last year, although the sale price was lowered to attract prospective applicants, contract cancellations followed, resulting in a total of five non-priority subscription rounds. Similar situations occurred in several complexes such as 'Songdo Lux Ocean SK View' in Songdo-dong, Yeonsu-gu, Incheon, which held six non-priority subscriptions last year, and 'Uijeongbu World Meridian' in Uijeongbu-dong, Uijeongbu-si, Gyeonggi-do.

For reserved unit bidding, you should be aware that funds must be raised in a short period. Typically, the deposit must be prepared within 10 days from the notification of winning the bid. The balance must be paid around 60 days later, so the payment deadline is shorter compared to subscriptions.

If you fail to prepare the balance within the deadline, you can pay a late fee of 18% per annum and delay payment for up to 30 days, but if you exceed the delay period, the contract will be canceled. If the contract is canceled due to non-payment of the balance, the bid deposit is forfeited to the apartment association, risking loss of money. Especially for reserved units that are not yet registered (unregistered title), it is difficult to get interim payment loans or mortgage loans, so reserved unit bidding should only be considered if short-term fund procurement is possible.