[Inside Chodong] Packing It Full Is Not the Answer

A System Centered on Suppliers, Not Consumers
The Challenge Lies in Lowering Barriers for More Effective Implementation

A friend contacted me earlier this month, saying they had won a bid at auction for a reconstruction apartment in the Gangnam area of Seoul. The property had already received management disposition approval, and the right to become a union member could be transferred. However, my friend was frustrated, not knowing how the Land Transaction Permission System (LTP system) would apply or what procedures were required to transfer union membership. When my friend finally reached an official at the district office, the official said there were no specific guidelines and referred them to the union. The union, in turn, claimed they had no authority over the matter. After much deliberation, my friend ultimately gave up.

After the government broadly designated the Gangnam area of Seoul as a Land Transaction Permission Zone (LTP zone), confusion persisted at the ground level. In response, the government coordinated with the Seoul Metropolitan Government and district offices to issue administrative guidelines. This came about a month after the re-designation. There was also controversy over fairness, as each district office set different deadlines for disposing of existing homes and varied in what disposal methods they would allow.

Although the guidelines were meticulously crafted to address complex cases, the controversy did not completely subside. There was ongoing debate over the government's conclusion that existing homes could be leased out instead of being sold. Questions continued to arise, such as how to handle cases where someone had agreed to sell their existing home but had not yet done so, or what would happen to the enforcement fines paid by those who missed the disposal deadline.

This cannot simply be dismissed as a minor incident. Real estate still makes up a significant portion of the assets of ordinary people and the middle class. Transaction costs are substantial. It left the impression that the system was being managed carelessly, despite the large sums of money involved. This, in turn, further eroded trust in the policy.

Would things change if we tried to meticulously regulate every possible scenario that might occur in society? Judging by recent apartment subscription announcements, that does not seem to be the case. One private apartment subscription announcement I recently saw in the metropolitan area was over 60 pages long, densely packed with small print.

The rules governing the housing subscription system have undergone several major changes since their introduction in the 1970s. The current framework was established in the 2000s, but even in recent years, the system has been revised three or four times annually. The Korea Real Estate Board, under the Ministry of Land, Infrastructure and Transport, first published a comprehensive book explaining the subscription system ("All About Housing Subscriptions") in 2022 and has released updated editions every year since.

It is entirely understandable that housing supply policies, as a key pillar of real estate policy, must adapt to changing times and external demands. However, excessively frequent changes and increasing complexity raise questions about whom the system is really for. As the system becomes more complicated, it means that bureaucrats gain more influence. Instead of prioritizing the needs of those affected by the policy, it seems the system is being controlled from the supply side.

Creating sound policies and systems is important. Equally important is ensuring that these are implemented in line with their original intent and in the right direction. This is not easy in today’s complex society. Nevertheless, if the purpose of a system or policy is ultimately to improve the lives of our society or its individual members, there is a compelling reason to lower the barriers for ordinary citizens, rather than reserving access for public officials or a handful of experts. Can we find a way to make the system work better in practice? At the very least, I believe our society should strive in that direction.