Ministry of Land, Infrastructure and Transport Surveys Disputes
in Regional Housing Cooperatives Nationwide
It has been found that three out of every ten regional housing cooperative projects currently underway across the country are experiencing disputes of varying severity. Regional housing cooperatives are a system in which residents directly purchase land and build apartments. However, in practice, the system often does not function smoothly as intended. Since President Lee Jae Myung listened to the voices of cooperative members who suffered damages both before and after his election, there is growing interest in whether solutions will be found going forward.
The Ministry of Land, Infrastructure and Transport announced on the 8th that, as a result of a comprehensive survey of disputes among regional housing cooperatives conducted over two weeks starting June 20, complaints were identified in 187 out of 618 cooperatives, totaling 293 cases. Although the system was introduced to allow housing demanders to build multi-family housing themselves, difficulties in securing land and issues such as additional contributions have caused many cooperative members to suffer damages.
In May, Lee Jae Myung, then the Democratic Party presidential candidate, was listening to complaints related to the Daegu regional housing association in Goryeong, Gyeongbuk. Photo by Yonhap News
The success rate is also relatively low. Of the 618 cooperatives surveyed, more than half?316 cooperatives (as of the end of 2024; hereafter the same)?were still in the recruitment stage and had not received establishment approval. In addition, 208 cooperatives, accounting for more than one-third, had failed to obtain establishment approval for more than three years after submitting their recruitment reports.
According to the dispute status collected through each local government, poor management of cooperatives was cited as a major issue in the early stages of projects. Many respondents also reported delays in withdrawals or refunds. After project plan approval, delays in withdrawals and refunds, as well as disputes related to construction costs, became the main issues.
By project stage, among the 187 cooperatives where disputes occurred, the largest number?103?were in the member recruitment stage. The main causes were identified as a lack of transparency in information during the early stages, difficulties in securing land, and delays in permits and approvals. By region, Seoul had the highest number, with disputes in 63 out of 110 cooperatives. In Gyeonggi, 32 out of 118 cooperatives experienced disputes, while in Gwangju, disputes occurred in 23 out of 62 cooperatives.
Vacant houses in the Hawolgok-dong area where a regional housing cooperative project was previously promoted but halted. Photo by Lee Seungjin
In one case, the head of a cooperative received membership fees and other payments into a financial institution account instead of the designated trust account. This individual was reported to the police on charges of embezzlement and breach of trust. At another site, a construction company demanded an additional construction cost of 93 billion won?about half of the original contract amount?citing delays in actual construction notices and fluctuations in material prices. There was also a cooperative that continued to collect contributions from members who had been deemed ineligible without notifying them, and then refused to return the funds even after the issue was discovered and a refund was requested.
Based on the results of this survey, the Ministry of Land, Infrastructure and Transport plans to conduct a comprehensive inspection of all regional housing cooperative projects nationwide by the end of next month. For major sites with disputes, joint special inspections will be carried out with related agencies to identify causes and support mediation and arbitration. Through these efforts, the ministry aims to identify institutional and operational issues and prepare measures to improve the system and enhance transparency in project management.
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