Revival of Sale-Type Housing... Risk of Becoming 'Zombie Elderly Housing' [Senior House]

[10] Revival of Sale-Type Housing, Preventing Zombie Elderly Housing

Ministry of Health and Welfare Announces Reapproval of Sales Allowed, Abolished in 2015
Industry: "Operations and Management Must Be Reorganized to Avoid Failure"

Allowing Sales Only in Population-Declining Areas Also Problematic
"Elderly Will Suffer Losses, and Developers May Refuse to Build"

Lobby view of a senior welfare housing in Gyeonggi-do. Photo by Jinhyung Kang aymsdream@

"It's neither a proper senior welfare housing nor a regular apartment; these senior welfare housings are sold off but poorly managed, so among ourselves, we call them 'zombie houses,'" said a senior welfare housing official who wished to remain anonymous, citing a brand-name apartment-style senior welfare housing in Suwon, Gyeonggi-do as a typical example of a zombie house. This place was built when the sale of senior welfare housing was permitted. However, it lacks the most basic facility?a communal dining hall. Rumors are widespread in the industry that due to poor management, even young people freely enter and live there.

The head of a senior welfare housing in Seoul repurchased about 200 units that were supplied as sale-type housing since 2007, one by one, until last year. "It's my house, so why should I care what others say?" Due to such perceptions among the elderly residents, it was difficult to get cooperation in operations, leading to this desperate measure. At that time, some elderly residents said, "I don't want to eat the mandatory meals," while others requested, "Please provide all three meals a day." It was impossible to grasp the demand. Even when trying to repair broken lobby tiles, complaints erupted from various places. This senior welfare housing is currently operated as rental-type.

Ministry of Health and Welfare Sparks Controversy by Allowing Sales of Senior Welfare Housing

Recently, when the government announced plans to allow the sale of senior welfare housing, voices of concern arose in the industry about the potential proliferation of such zombie houses. The sales system was abolished in 2015 due to the abandoned Silver Town incidents where sales were made but operations were neglected. However, when the Ministry of Health and Welfare expressed intentions to revive it, industry insiders emphasized, "We must ensure that elderly residents do not suffer harm and are not forced to wander in search of new homes again."

On March 22, the Ministry of Health and Welfare announced plans to apply the sales system to senior welfare housing in depopulated areas to secure business viability. A senior policy official from the Ministry said on the 23rd, "Developers need sales to recover initial investment costs, but since only rentals were allowed, it was difficult to recoup investments, so they did not build at all. If the sales system is reintroduced, more developers will build senior welfare housing than now," explaining the rationale.

A health care room in a senior welfare housing in Gyeonggi-do. Photo by Jinhyung Kang aymsdream@

Senior welfare housing operators said that while supply is important, policies should focus on management. Kang Daebin, Vice President of the National Association of Senior Residential Welfare Facilities, said, "We should not view the elderly as residents who have acquired property rights. Since they move in to receive services, their 'facility usage rights' should be guaranteed as much as property rights."

In fact, during the late 1990s to early 2000s when Silver Towns were popular, the flaws of the senior welfare housing sales system were clearly exposed. Elderly buyers sold their sales rights to people under 60. The elderly disappeared from senior welfare housing, and younger people began living there, but there was no way to stop it. Developers who built Silver Towns took the money and fled. Promised services such as "medical staff residing permanently" were not fulfilled. Young people occupying Silver Towns even demanded local governments to convert senior welfare housing into regular apartments.

Some argue that while increasing the supply of senior welfare housing, responsibility for facility management should also be enforced, and that applying only the sales system is insufficient. A senior welfare housing official in Gyeonggi-do said, "It is important to mix sales and rentals 50-50 and set operational term agreements for 5 or 10 years so that the facility can stabilize. Proper operation maintains the value of sold units and ensures they can be resold at fair prices."

A fitness center in a senior welfare housing in Gyeonggi-do. Photo by Jinhyung Kang aymsdream@

Senior Welfare Housing in Depopulated Areas?

The industry questions the government's limitation of allowing sales only in '89 depopulated areas.' They point out that building senior welfare housing in places severely lacking infrastructure necessary for the elderly is unreasonable.

At the policy announcement, Lee Gi-il, First Vice Minister of Health and Welfare, explained, "When I visited Gochang, Jeonbuk, many said that sales must be allowed in depopulated areas for funds to circulate," implying that cheap land makes construction easier and population inflow to underdeveloped areas is expected.

On the other hand, a senior welfare housing official in Gyeonggi-do observed, "As seen from past Silver Town failures, hospitals and transportation accessibility are very important for the elderly. Depopulated areas lack these conditions, so even if supplied as sales-type, housing prices will fall. Elderly buyers who paid hundreds of millions will only suffer losses." He added, "Developers have no intention of building housing in depopulated areas. If the goal is to increase senior welfare housing by reintroducing sales, the limitation to depopulated areas must be reconsidered from the start."