Even With Raemian and Xi Brands... LH Oversees Quality, Competence Put to the Test [LH Private Participation Apartment]

①Government Prioritizes Speed, Expands LH's Direct Implementation
Efforts to Strengthen Public Interest... Greater Responsibility for Quality
Unrecovered Defect Compensation Ultimately Paid by Taxpayers
"Quality Over Quantity?Genuine Results Must Be Felt by the Public"

As the government moves to expand the direct implementation of public housing supply through Korea Land and Housing Corporation (LH), issues surrounding housing quality have come to the forefront of public debate. Kim Yoonduk, Minister of Land, Infrastructure and Transport, acknowledged, "There is a widespread perception that the quality of LH apartments is lacking," and emphasized, "We will provide high-quality housing through bold cooperation with private construction companies." However, some point out that simply attaching a private brand does not guarantee housing quality. Instead, there is growing support for the idea that, as in other countries, LH-as the project owner-should be held legally responsible in order to raise housing quality standards.

Quality Standards and Sanctions for LH Private Participation Public Housing Projects

The private participation public housing project complex in Wirye New Town, Seongnam-si, Gyeonggi Province, "Wirye Xi The City." On the 19th of last month, Kim Yoonduk, Minister of Land, Infrastructure and Transport, visited the site and said, "In a situation where the private construction market is shrinking, private participation projects are being rapidly promoted under the responsibility of the Korea Land and Housing Corporation, which will greatly help revitalize the construction economy." GS Construction

According to the "2025 5th Private Participation Public Housing Construction Project Private Operator Recruitment Guidelines" announced by LH in May, construction companies must follow the instructions of supervisors (construction project management engineers) who are either affiliated with LH or selected by LH through the Public Procurement Service, throughout the entire construction process, in accordance with the Construction Technology Promotion Act and other regulations. LH has the authority to directly conduct construction evaluations and on-site inspections when necessary, and to issue "Notice of Inadequate Quality" and other sanctions if standards are not met. In practice, even if LH outsources supervision to a service provider, the relevant engineer is placed in a position to manage and supervise in the name and authority of LH. Although it is in the form of outsourcing, the person essentially acts on behalf of LH.

At LH sites where supervisors are assigned, LH construction managers are also deployed. They are tasked with confirming and coordinating the work of the supervisors on behalf of the project owner. Construction managers are responsible for thoroughly understanding the details of the supervision contract and diligently carrying out oversight duties.

An official from a major construction company participating in a private participation project said, "LH has overall responsibility for quality control in these projects. Even if we manage quality according to our own guidelines, ultimately, we follow the instructions of the supervisors assigned by LH." He added, "Private participation projects are fundamentally different from general private projects in that LH directly controls the site." A Ministry of Land, Infrastructure and Transport official also stated, "In private participation projects, both the construction company and LH conduct dual quality inspections."

Is Every Raemian the Same? ... The 1-10-100 Rule

However, the project owner does not bear legal responsibility; their responsibility is only administrative and moral. Under the Construction Technology Promotion Act, direct responsibility for quality and construction lies with the contractor and the supervisor. The project owner is obligated to assign and manage supervisors, but when safety or quality defects occur on site, they are not subject to criminal or legal liability.

Jeong Taeksu, head of the Real Estate National Project Team at the Citizens' Coalition for Economic Justice, argued, "The responsibility structure of Korea's construction industry is fundamentally flawed. Although the project owner, as the final decision-maker, should bear the greatest responsibility, the current system creates loopholes that allow them to shift responsibility to lower-level entities." In the United Kingdom, a leading country in construction, the Construction Design and Management Regulations (CDM) clearly define the project owner as the party with ultimate responsibility for safety and quality. Since the project owner makes the final decisions regarding design and construction, they should also bear responsibility in the event of an accident.

Poor supervision by LH directly leads to financial burdens. According to the office of Um Taeyoung, a member of the National Assembly's Land, Infrastructure and Transport Committee, LH paid a total of 262.9 billion won in compensation over the past five years (2020-2024) due to losing apartment defect lawsuits. Of this amount, LH sought reimbursement from contractors, designers, and supervisors for 103.6 billion won, but only managed to recover 58.7 billion won. The remaining amount was ultimately covered by taxpayers. The construction industry explains this as the "1-10-100 rule": if a defect is caught during construction, the cost is only 1; if missed and fixed just before completion, the cost is 10 times higher; and if discovered after residents move in, the cost increases more than 100-fold.

As Minister Kim stated, attaching a private brand does not necessarily improve housing quality. According to the Ministry of Land, Infrastructure and Transport, from September last year to February this year, ten of the top twenty construction companies with the most apartment defects were major firms such as Hyundai Engineering & Construction and Daewoo E&C. The number one spot was held by Hanwha Construction Division, ranked 11th in construction capability evaluation. Over the past five years, GS Construction had the highest cumulative number of defects (1,458 cases), with Daewoo E&C, Hyundai Engineering, and Lotte E&C also ranking high. Jeong Taeksu emphasized, "As seen in the Gwangju Hwajeong I-Park collapse and the Hakdong demolition building disaster, it is difficult to say that large companies are inherently safer or produce higher quality. The expansion of private participation projects is essentially a mechanism to preserve construction company profits during economic downturns, rather than to ensure quality."

Kwon Youngjin, a member of the National Assembly's Land, Infrastructure and Transport Committee, stated, "Due to the government's September 7 policy, the volume of projects handled by LH is expected to increase further. As the number of LH projects grows, so too will the number of defects, which foreshadows even greater problems ahead." In fact, as the volume of LH public housing move-ins has increased over the past five years, the average number of general defects per household surged from 5.75 in 2021 to 9.78 as of August this year. Kwon further commented, "Improving the quality of housing as experienced by the public is just as important as increasing supply. LH must now focus on enhancing quality competitiveness rather than just competing in numbers."