SH Corporation "Housing and Urban Fund Should Be Allocated by Subscription Account Numbers by Region"

Proposal to Establish 'Regional Allocation Fund' in Housing and Urban Fund
"25% of Newly Raised Amount Should Be Allocated to Metropolitan Local Governments"
Allocating by Number of Subscription Savings Accounts Enables Seoul to Utilize 2 Trillion Won

Seoul Housing and Communities Corporation (SH) argued that support from the Housing and Urban Fund at the regional level is necessary to alleviate housing inequality in response to changes in population and household structures. They proposed establishing a 'Regional Development Fund' to allocate the Housing and Urban Fund to regions and entrusting fund management to metropolitan local governments.

On the 1st, SH announced the publication of a policy report titled "Transition to a Decentralized Housing and Urban Fund." The report pointed out the need for structural reform of the Housing and Urban Fund to strengthen decentralization.

Currently, the Housing and Urban Fund supports public housing supply projects through loans and investments on a project-by-project basis, while other housing, urban, and residential welfare projects involve costs borne by local governments. SH holds the position that a portion of the Housing and Urban Fund should be allocated to regions to be utilized in various local residential welfare programs. Previously, in December last year, SH pointed out that although Seoul's contribution to the Housing and Urban Fund reached 25 trillion won, the policy benefits amounted to only 10 trillion won.

The SH Urban Research Institute proposed creating a regional allocation fund (tentative name) to operate and utilize the Housing and Urban Fund more efficiently, suggesting that 25% of the total newly raised amount be distributed to regions in proportion to the number of subscription savings accounts.

Since subscription savings clearly indicate regional contribution and serve as a criterion to gauge regional demand for sales and rentals, a portion of the subscription savings should be allocated to metropolitan units in proportion to the number of accounts.

The SH Urban Research Institute predicted that if the regional allocation fund is established, Seoul would receive approximately 1.7 trillion won based on population ratio criteria and about 2.3 trillion won based on subscription account ratio criteria.

They proposed setting an upper limit on the allocation amount considering each local government's fund management capacity, requesting fund allocation based on the comprehensive housing plans of metropolitan local governments, and having the Ministry of Land, Infrastructure and Transport and the Housing and Urban Guarantee Corporation review and decide on the allocations.

The SH Urban Research Institute expressed the opinion that it is appropriate for metropolitan local governments to manage the regional allocation fund (tentative name). The allocated funds should be limited to supporting public housing supply by local housing and urban corporations through loan projects for suppliers, while support for demand-side recipients should remain a function of central government agencies.

Furthermore, they suggested that an independent Local Housing and Urban Fund Management Committee (tentative name) be established for each region to make key decisions and supervise the planning, execution, settlement, and recovery of the allocated funds.

The SH Urban Research Institute plans to conduct additional research on mid- to long-term roadmaps and institutional improvement plans for the Housing and Urban Fund.

Kim Heon-dong, President of SH Corporation, stated, "The current Housing and Urban Fund system has limitations in implementing long-term and comprehensive residential welfare policies for each local government," adding, "We need to explore changes in the role of the Housing and Urban Fund as one of various financing methods."