[Real Estate AtoZ] Rent and Deposit Vary for Yeokseseon Youth Housing Depending on Public or Private Sector

[Asia Economy Reporter Tae-min Ryu] A, a worker in their 20s, is troubled as the lease period of their current jeonse house is about to expire. Although they decided to move to another area, their anxiety about the recently highlighted social issue of jeonse fraud has increased. Ultimately, A decided to move into a public-supported Yeoksegwon Youth Housing for the safety of the jeonse deposit.

As concerns about jeonse fraud have grown across the Seoul metropolitan area, more young people are turning to youth rental housing supported by the public sector. The rent is cheaper than market prices, and since the government is involved, they naturally expect to get their jeonse deposit back. However, it is important to note that in Yeoksegwon Youth Housing, rent and deposit conditions may vary depending on the supply type.

What exactly is Yeoksegwon Youth Housing?

Yeoksegwon Youth Housing is rental housing supplied at relatively affordable prices to young generations in need of housing support by the Seoul Housing & Communities Corporation (SH Corporation) and private developers. The housing type is officetel. It is characterized by its proximity to subway stations, offering excellent transportation conditions.

Yeoksegwon Youth Housing differs in residence period, management entity, and rent depending on the supplier. Within one complex, public rental units and publicly supported private rental (private rental) units are mixed. Public rental units account for 20% of the total supply, while private rental units make up 80%. Public rental units allow residence for up to 6 years, whereas private rental units supplied by private developers allow up to 8 years of residence.

It is also important to note the difference in management entities. Public rental units are supplied by SH Corporation, which purchases some units and manages everything from tenant recruitment to jeonse deposit management. The landlord is essentially a government agency. On the other hand, private rental units are supplied and managed by private developers. Therefore, if issues such as non-return of the jeonse deposit arise, the responsibility lies with the private developer. Although the landlord is a business entity rather than an individual, there is still a possibility that the jeonse deposit may not be returned depending on the developer’s situation.

In the same complex... does rent differ by type?

Rent varies significantly depending on the supplier. First, public rental units are supplied at about 30% of the surrounding market rent. While the rent is greatly reduced compared to market prices, the number of units is limited, so competition among young applicants is generally high. In fact, in December last year, 40,496 applicants competed for 529 public rental units in Yeoksegwon Youth Housing, resulting in a competition ratio of 76.6 to 1.

On the other hand, private rental units have significantly higher rent than public rental units. Special supply units within private rentals are priced at about 85% of the surrounding market rent, and general supply units are provided at about 95% of market rent. Since private developers recruit and announce these units, the number of units supplied is larger and the rent is higher than those supplied by SH Corporation.

However, the no-interest rental deposit support program provided by SH Corporation is also available to prospective tenants of private rental units. SH Corporation lends a portion of the rental deposit interest-free to Yeoksegwon Youth Housing tenants. If the rental deposit exceeds 100 million KRW, 30% of the deposit can be borrowed, and if the deposit is 100 million KRW or less, up to 50% of the deposit can be applied for.