In the future, land leasehold sale housing is expected to become tradable between individuals after 10 years of residence. Until now, land leasehold sale housing was considered 'half-baked' because even after the resale restriction period ended, it could only be repurchased by Korea Land and Housing Corporation (LH), making it difficult to gain profit from price differences. However, with the amendment of the law allowing transactions between individuals, demand is expected to increase.
According to the National Assembly Land, Infrastructure and Transport Committee on the 6th, the amendment to the Housing Act containing this content passed the full committee meeting on the 30th of last month. After passing the plenary session of the National Assembly on the 8th, it can be implemented around the first quarter of next year. Land leasehold sale housing is a type of housing where the public sector owns the land and only the buildings are sold, lowering the sale price. It has attracted attention as a key project of Seoul Housing and Communities Corporation (SH), enabling affordable home ownership in prime locations such as Seoul.
However, under the current Housing Act, the limitation that sales after the mandatory 10-year residence period can only be made to Korea Land and Housing Corporation (LH) was considered a drawback. Since the houses could not be freely bought and sold, and the disposal price was limited to the sale price plus inflation rate and fixed deposit interest rate, it was pointed out that it was practically difficult to gain meaningful price differences.
In fact, many winners of the land leasehold housing in the popular pre-sale this year at Godeok Gangil 3 Complex gave up their winning rights. The Godeok Gangil 3 Complex was initially priced at around 300 million KRW for a 49㎡ exclusive area in the Gangnam living area, more than 50% cheaper than market prices, resulting in a high competition rate of 14:1 for special supply and 34:1 for general supply during the pre-sale in June. However, due to concerns about the difficulty of free trading and the possibility that the monthly land lease fee could rise above the announced amount, many gave up their winning rights. According to SH, among 491 winners excluding disqualified persons, 152 (31%) voluntarily gave up their sale.
The amendment to the Housing Act includes a plan to expand the sale target to local public corporations such as SH when moving during the mandatory residence period. From 10 years after the resale restriction period, transactions between individuals will be allowed. The regulation that required sales to LH at a fixed price has been lifted, making it possible to sell houses to individuals and gain price differences.
However, despite the relaxation of sales regulations, the high burden of land lease fees due to high interest rates remains a challenge. The land lease fee is calculated by applying the bank's 3-year fixed deposit interest rate to the development cost of the land. The lease fee is determined at the time of the main subscription, and if interest rates rise, the lease fee increases accordingly. The land lease fee fixed at the main subscription can rise depending on external variables such as interest rates.
Policy loan issues are also a variable. Since the land and building owners are different in land leasehold sale housing, it is difficult to obtain general mortgage loans. The New Home 'Nanum-type,' a type of public sale housing, allows borrowing up to 80% of the sale price within a 500 million KRW limit at a low fixed interest rate for up to 40 years. However, although land leasehold housing is supplied as one of the government's public sale brands 'New:Home,' it cannot use the exclusive New Home mortgage.
An SH official said, "This amendment to the Housing Act is meaningful in correcting unnecessary regulations by allowing beneficiaries to resell not only to LH but also to other housing public corporations such as SH," and added, "The part allowing free transactions between individuals after the resale restriction period is also expected to have a positive effect on the system."
He continued, "We are currently in the planning stage regarding loans related to land leasehold sale housing," and said, "We will review various measures such as loans and new product establishment referring to previous LH land leasehold housing cases and consult with the Ministry of Land, Infrastructure and Transport."
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