Delays in appointing a new CEO for the Korea Land and Housing Corporation (LH) and the announcement of its reform plan have disrupted the timeline for organizational restructuring and supply policies. The failure to present a candidate for the CEO position at the recent Public Institution Management Committee (PIMC) meeting has raised concerns about the weakening momentum for reform. Additionally, the government's key strategy for stabilizing the rental market, the supply of rental housing, has only met 10% of its annual target this year, intensifying worries over a leadership vacuum.
According to the Ministry of Land, Infrastructure and Transport and LH, the candidate for the new CEO was not presented at the PIMC meeting scheduled for May 29. The CEO position has been vacant for several months since the re-application process began at the end of last year, marking an unusually long absence within LH.
Speculation is growing that the delay in appointing a CEO could also postpone the announcement of the reform plan. The ministry initially aimed to finalize the LH reform plan by March but later adjusted the timeline to the first half of the year. If inter-departmental discussions and candidate vetting take longer, the announcement of the reform plan and the CEO appointment may not occur until after the local elections.
However, the ministry maintains that it plans to announce the reform plan within the first half of the year. An official stated, "There has been no change to the schedule for the announcement within the first half of the year," adding that there is no confirmation of any possibility of postponement to the second half.
The core of the reform involves splitting LH into separate entities. Currently, a proposal is being considered to divide the organization into a development entity that acts as a public developer and a management entity responsible for rental and reserve functions. There are also discussions about a three-way split involving LH, the Land and Housing Bank, and the Housing Management Corporation.
Internally, there is a view that the management entity responsible for rental and reserve functions may need to operate as a public corporation funded by the government, as it is unlikely to generate its own revenue. One LH official remarked, "An organization focused solely on rental and management functions is unlikely to be self-sustaining. It is likely to require budget support in the form of a public corporation."
The challenges following the split are significant. New personnel and increased costs will be unavoidable with the establishment of new organizations, and the financial independence of the management entity must also be addressed. Direct government funding is not easily secured, and it has been reported that the surplus funds in the Housing and Urban Fund have decreased from 49 trillion won in 2021 to around 14 trillion won currently.
The impact of the reform delays is also being felt in the supply sector. According to the Ministry and LH, the performance of rental housing agreements in the metropolitan area from January to April this year totaled 3,217 units, representing only 10.4% of the annual target of 30,014 units. Of this, 2,678 units were new agreements, while 539 were for existing properties.
The government has set a goal to supply 90,000 rental housing units in the metropolitan area by 2027. While agreements tend to concentrate towards the end of the year, the current gap from the target indicates a need for a more effective execution system to accelerate supply.
Industry insiders warn that as the CEO vacancy and uncertainty over organizational restructuring prolong, the effectiveness of LH's supply policies, including the expansion of rental housing, the third new town project, and public land development, may weaken. An industry representative stated, "As the CEO vacancy continues, there are limits to simultaneously pursuing the split design and the expansion of rental housing. To prevent supply failures, it is urgent to align the direction of reform and establish a control tower to lead execution."
* This article has been translated by AI.
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