"Long-term Jeonse Housing Saves 368 Billion KRW Annually... Policy Support Needed for Sustainable Supply"

SH Corporation, Analysis of Long-term Jeonse Housing Operation Performance
Average Deposit at Half the Market Price
Asset Value Tripled Compared to 2007

An analysis revealed that Seoul’s representative public housing policy, the ‘Long-term Jeonse Housing,’ is generating an annual housing cost reduction effect of 368 billion KRW.

Exterior view of the long-term rental housing in Naegok District, Seocho-gu, Seoul. Photo by Seoul City

Seoul Housing & Communities Corporation (SH Corporation) analyzed the operational performance of Long-term Jeonse Housing and announced this on the 29th. Long-term Jeonse Housing is a public rental housing first supplied by the Seoul Metropolitan Government in June 2007, allowing residents to live at less than half the market Jeonse price. The average deposit for the entire complex is about 280 million KRW, which is half the market price (600 million KRW). The first Long-term Jeonse Housing, ‘Balsan 2 Complex’ in Gangseo-gu, is occupied at about 23% of the Jeonse market price, and ‘Segok 2-3 Complex’ in Gangnam-gu is at about 42% of the market price.

SH Corporation stated that through this, households save 12 million KRW annually on housing costs, totaling 368 billion KRW per year, and 3.6 trillion KRW over 10 years.

Long-term Jeonse Housing allows residence for up to 20 years. The average residence period is 9.6 years, which is relatively longer compared to general public rental housing, and the average area is also spacious at 72.1㎡. As of this month, a cumulative total of 34,932 households (combined SH Corporation and city-owned units) have been supplied, with most construction completed between 2007 and 2011.

From the supplier SH Corporation’s perspective, since the first supply in 2007, the asset value of Long-term Jeonse Housing has increased about threefold from an acquisition cost of 8.9 trillion KRW to an estimated market price of 27.1 trillion KRW as of December 2023 (officially assessed price 18.7 trillion KRW). SH Corporation explained, “By holding Long-term Jeonse Housing, acquired at a lower price (300 million KRW) than recently purchased rental housing costing 400 to 600 million KRW per household, for a long period, the asset value has significantly increased.”

Seoul plans to supply 4,000 Long-term Jeonse Housing units annually starting in 2026, and SH Corporation plans to supply Long-term Jeonse Housing by redeveloping aging public rental housing complexes. Additionally, SH Corporation is participating in the 3rd phase of new towns in the metropolitan area and is continuously requesting to secure Long-term Jeonse Housing supply through ‘Gold Town’ within the metropolitan area.

SH Corporation argued that policy support such as exemption from comprehensive real estate tax and national subsidies is necessary for the continuous supply of Long-term Jeonse Housing. According to SH Corporation, as of 2023, a total of 6.2 billion KRW in comprehensive real estate tax was imposed on 355 Long-term Jeonse Housing units exceeding the official assessed price. Public rental housing exceeding a certain official assessed price at acquisition is subject to comprehensive real estate tax (9 billion KRW for construction type, 6 billion KRW for purchase type). Furthermore, “While construction-type national rental housing, which incurs the same cost, receives national subsidies of 37 million to 54.8 million KRW per household, and purchase-type rental housing receives 45% of the purchase cost as national subsidies, Long-term Jeonse Housing receives no national subsidies,” they emphasized.

Kim Heon-dong, president of SH Corporation, stated, “To allow more citizens to benefit from Long-term Jeonse Housing and to ensure its continuous supply, policy support such as exemption from comprehensive real estate tax and national subsidies is absolutely necessary.”