Seoul City Meets with Regional Housing Association Agents and Trust Companies to Seek Improvements

Meeting Held to Prevent Regional Housing Association Damage
Discussion on Responsibilities and Authority Including Proper Fund Execution and Information Disclosure

The Seoul Metropolitan Government met with business agencies that handle overall project promotion for local housing cooperatives and trust companies that manage cooperative funds to discuss measures to prevent damages related to local housing cooperatives.

Apartment complex in Gayang-dong. Photo by Jo Yongjun jun21@

On the 23rd, Seoul City announced that it held meetings on the 13th and 16th to ensure transparent and proper execution of local housing cooperative project expenses, information disclosure, and compliance with obligations such as on-site investigations. A total of 12 executives and employees from seven local housing cooperative business agencies and trust companies participated in the meetings.

Business agencies act on behalf of the cooperative in overall cooperative operations, including recruiting members, securing land, holding general meetings, and matters related to project plan approval. The scope of work that business agencies can perform is stipulated in the Housing Act. From tasks for establishing the cooperative to reviewing project feasibility, preparing project plans, and supporting the selection of design and construction companies, they play a decisive role in the success of the project.

Trust companies are entrusted with the custody and execution of funds such as deposits from the housing cooperative and its promoters. They manage the project funds paid by cooperative members. Since the amendment of the Housing Act, from July 2020, the custody of funds previously handled by business agencies has been transferred to trust companies. Trust company fund management is known to provide trust in transparent operations and influence citizens considering joining cooperatives.

During this meeting, the city focused on discussing the work processes of business agencies and trust companies when disbursing project expenses and points for improvement to create conditions for proper execution of project funds.

Local housing cooperative projects require prior land acquisition, but there have been cases where significant project expenses were spent without obtaining land ownership. Improper project expenses can lead to additional contributions and, even if the project is halted, can disadvantage cooperative liquidation. Therefore, it was judged necessary to clarify the roles and responsibilities of project stakeholders.

The city requested strict compliance with obligations stipulated in the Housing Act, such as information disclosure and performance reporting by cooperatives. They also exchanged opinions on necessary measures to strengthen these obligations. Since last month, the city has announced and implemented a policy not to proceed with 'district unit plan' related procedures for cooperatives that fail to transparently disclose information to members or do not address issues pointed out in on-site investigations.

Additionally, the city listened to difficulties throughout the project promotion process, including reasons why local housing cooperatives find it difficult to purchase land. Issues requiring improvement will be carefully reviewed and institutional improvements will be pursued.

Han Byung-yong, Director of the Seoul Housing Policy Office, said, "The difficulties and points for improvement in promoting local housing cooperatives heard through this meeting will be carefully reviewed and used for institutional improvements. This year, we will continue to conduct on-site investigations of local housing cooperatives and, if necessary, hold further meetings with stakeholders to intensively focus on efforts to prevent damages caused by local housing cooperatives."