[Jiptok] "Newborn Special Loan '85㎡ or Less' Area Restriction Should Be Lifted"

National Assembly Legislative Research Office '22nd National Assembly Legislative Policy Guidebook'

"Smaller Housing Size Does Not Mean Lower Housing Prices"
Regulating for Exclusive Area Under 85㎡ Causes Reverse Discrimination

Multi-Child Families Needing More Rooms
Cannot Receive Special Loan Benefits Due to Area Regulations

Newborn Special Cases Should Escape Uniform Regulations
To Enhance Low Birthrate Countermeasures Effectiveness

"Our second child was born recently, but although our home is valued under 600 million won, it exceeds 85㎡ in area, so we do not qualify for the newborn special loan refinancing conditions. There are many homes under 900 million won in both the metropolitan area and provinces, even if the area is large. It seems that the newborn special loan is a system only applicable to residents of Seoul. Since it is literally a 'special loan,' I hope the area restriction can be lifted. I earnestly ask for this." (Kim* Jun, Ministry of Land, Infrastructure and Transport website)

"You want a family of three kids and two adults to live in an 85㎡ apartment? The kids aren’t going to stay small forever; they will grow, so why the area restriction? The place we are trying to move to now is 85㎡ exclusive area and costs 540 million won. But just across the street, there is a 100㎡ exclusive area home priced at 520 million won. Even if we want to live in a bigger and cheaper place, we can’t get the special loan because of the area restriction. Does that mean we have to settle for a smaller home?" (Go*, Ministry of Land, Infrastructure and Transport website)

When such opinions were raised regarding the newborn special loan introduced by the Ministry of Land, Infrastructure and Transport to stabilize housing for families with newborns, the National Assembly Legislative Research Office pointed out that the area restriction on apartments eligible for the newborn special loan should be removed. On the 17th, the Legislative Research Office announced this through the "22nd National Assembly Legislative Policy Guidebook."

The newborn special loan currently applies only to homes of national housing size (exclusive area of 85㎡) or less. This restriction exists because the funds for the newborn special loan come from the Housing and Urban Fund. According to the Housing and Urban Fund Act, an exclusive area of 85㎡ or less is defined as national housing size, and the fund is operated based on this standard.

The newborn special loan applies to homes with a sale price of 900 million won or less and a jeonse (lease) price of 500 million won or less. The loan limit is 500 million won for purchase and 300 million won for jeonse. Interest rates range from 1.6% to 3.3% for purchases and 1.1% to 3.0% for jeonse. According to the Ministry of Land, Infrastructure and Transport, the volume of newborn special loan applications reached 5.1722 trillion won (20,948 cases) over three months (January 29 to April 23 this year).

The Legislative Research Office emphasized that above all, the regulation limiting the size of homes eligible for the newborn special loan to national housing size should be lifted. Jang Kyung-seok, a legislative researcher at the National Assembly Legislative Research Office, said, "Since this is a measure introduced by the government to overcome low birth rates, there is a need to ease regulations beyond the existing framework."

He explained, "A smaller home does not necessarily mean a lower price, so deciding public support eligibility solely based on size raises concerns about reverse discrimination." For example, according to KB Kookmin Bank housing price data, the Songdo The Sharp Master View apartment in Songdo, Incheon, has a market price of 840 million won for a home with an exclusive area of 84㎡. Meanwhile, the Vision Lotte Castle apartment in Vision-dong, Pyeongtaek, Gyeonggi Province, has a home with an exclusive area of 122.5㎡ priced at 405 million won. The former is eligible for the newborn special loan because the apartment area is small despite the higher price, but the latter is excluded due to its size even though the price is lower.

The area restriction is also a hurdle for multi-child families. A household with three or more children of different genders needs at least four rooms, but this is practically impossible in homes with an exclusive area of 85㎡ or less. Researcher Jang said, "In cases where a large home is needed for multi-child families, limiting support to national housing size means they miss the opportunity to receive the newborn special loan."

The Legislative Research Office proposed that in the 22nd National Assembly, "Article 9 of the Housing and Urban Fund Act should be amended to relax the usage restrictions of the Housing and Urban Fund, which finances the newborn special loan." The existing clause specifying "purchase or lease of homes of national housing size or less" should remove the phrase "national housing size or less" to eliminate the area restriction. Researcher Jang suggested, "Measures should be taken to expand the scope of benefits for the newborn special loan by moving away from uniform regulations."