LH Purchase Rental, Comparison with SH is "Inappropriate"
"Applying Cost Method to Reasonably Review Purchase Price"
Korea Land and Housing Corporation (LH) has rebutted the claims made by the Citizens' Coalition for Economic Justice (CCEJ) that LH is purchasing rental housing at inflated prices. LH argued that it is inappropriate to compare the prices of Seoul Housing and Communities Corporation (SH) apartments, which CCEJ presented as a comparative example, with the prices of rental housing purchased by LH through contract purchase agreements.
On the 2nd, LH released rebuttal materials in response to CCEJ's claims that LH is buying rental housing at high prices.
On the same day, CCEJ announced the results of an analysis of LH's annual rental housing purchase status from 2021 to 2023. CCEJ claimed that LH wastes tax money by purchasing rental housing through a 'contract purchase' method, where LH signs agreements in advance to buy privately built houses after completion. According to CCEJ's analysis, the cost spent on contract purchases over the past three years amounted to 8.7 trillion KRW, accounting for 80% of the total rental housing purchases.
CCEJ predicted that the contract purchase method is more expensive than purchasing existing houses, where the land acquisition and construction costs of private developers are reflected in the price during the construction of new houses. According to CCEJ's analysis, the purchase price of LH rental housing with a net floor area of 82㎡ was up to 390 million KRW higher than the SH apartment's construction cost.
In response to these claims, LH stated, "SH Wirye District A-1 12BL (Wirye Forest Shine Complex 15) is a case where land was secured at a low price through expropriation after releasing the greenbelt on the outskirts of the city," adding, "It is unreasonable to simply compare this with the new construction contract purchase projects where the corporation purchases housing within the city."
LH also pointed out that there is a time gap in comparing LH rental housing and SH apartments. LH explained, "The project period for Wirye Forest Shine Complex 15 was from October 2018 to May 2021, and there is a time difference compared to new construction contract purchase housing after 2021, when construction raw material prices surged due to COVID-19 and supply chain crises."
Regarding the controversy over high purchase prices, LH said, "When calculating purchase prices, we review the appropriateness of the appraisal amount based on the cost method according to appraisal-related laws and regulations, ensuring that purchase prices are reasonably set."
Meanwhile, according to LH, the vacancy rate of LH rental housing is managed within the 3% range, which is lower than the OECD average of 5%. LH stated that it makes efforts to resolve vacancies by converting to types with high demand and relaxing rental conditions when vacancies occur.
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