The South Korean government announced a new housing supply plan on August 13, aimed at expediting public land development and easing regulations on redevelopment and reconstruction projects. The plan introduces various new housing models, including equity accumulation public sales, universal public rentals, long-term private rentals for 20 years, and youth universal lease rentals. Additionally, it seeks to alleviate the so-called 'marriage penalty' that restricts policy loans after marriage.
According to the Ministry of Land, Infrastructure and Transport, the new measures will reduce the average time from the announcement of public land candidates to construction from 68 months to 37 months. The designation of districts will be shortened from 12 months to 4 months, while district planning will be cut from 24 months to 13 months. The site acquisition phase, including compensation and relocation, will be reduced from 44 months to 24 months. Specialized models will allow construction to begin within 21 to 34 months after announcement, depending on project conditions.
Regulations on redevelopment and reconstruction will also be relaxed. The approval rate for establishing redevelopment associations will decrease from 75% to 70% among landowners, while the consent rate for designating public redevelopment and reconstruction project implementers will drop from 67% to 60%. If only one company participates in the general competitive bidding for construction, the re-bidding process and submission period will be shortened.
◆ New Universal Public Rental Housing for Low-Income and General Public
The rental housing system will undergo significant changes. The government will establish a new 'universal public rental housing' category, separate from existing public rentals.
While current public rentals are limited to those earning 150% or less of the median income and focus on low-income households, the universal model will broaden eligibility. More than 50% of the total units will be allocated to young people without homes, with the remainder going to the general public without housing.
Locations will be centered around preferred areas, such as transit-oriented developments in the third new towns and downtown Seoul. The design will shift from two-bay to three-bay layouts, and the quality of finishing materials will be elevated to match private housing standards. The basic residency period will be six years, extendable with each childbirth, allowing families with three or more minor children to stay for up to 20 years. In areas subject to private sale regulations, the Korea Land and Housing Corporation (LH) will prioritize purchasing units for universal public rental housing.
A new long-term rental model will also be introduced for the private sector, addressing the lack of financial support for long-term operators. The government will implement a 'long-term mortgage for rental housing' backed by the Housing and Urban Guarantee Corporation (HUG), allowing for up to 34 years of financial support, including construction and rental operation periods.
For 20-year rentals, the fund's investment limit will increase from 11% to 14% of total project costs, and the maximum loan limit will rise from 120 million won to 200 million won. The interest rate will be lower than the current 2.6% to 3.4% for 10-year rentals, set at 2.0% to 2.8%. The initial rent will be set at 95% of the market rate.
A new 'universal lease rental' program for youth will also be introduced. The existing youth lease rental program, which supports a maximum of 120 million won for individuals in the metropolitan area, will double the limit to 240 million won and use a lottery system for allocation. The current youth lease rental program will remain in place alongside this new type.
◆ Public Sales with 25% Initial Payment and Equity Sharing
The public sales method will also change. The government plans to offer about 15% of public sale units as equity accumulation or profit-sharing types.
The equity accumulation model allows buyers to pay only 25% of the initial sale price, with the option to acquire an additional 20% every five years, ultimately securing ownership over 20 to 30 years. The profit-sharing model will provide low-interest loans from the housing fund for homebuyers, with profits generated from the housing shared between the fund and the buyers. This model will support low-interest loans with a maximum loan-to-value ratio of 70%.
The government will also address the issue of policy loans being unavailable after marriage. Currently, loans such as the Didirim, Buteumok, and Bogumjari loans assess eligibility based on combined income after marriage. The new policy will allow loans if either spouse meets the general income criteria. For example, a couple with incomes of 50 million won and 70 million won would currently be disqualified for a Didirim loan due to their combined income exceeding the limit, but under the new rules, the assessment will be based on the 50 million won income.
Additionally, protections for lease deposits will be enhanced. The support eligibility for youth lease deposit return guarantees will expand from an annual income of 50 million won and a deposit of 300 million won to approximately 65 million won in income and deposits of 700 million won in the metropolitan area and 500 million won in non-metropolitan areas. The support amount will also increase from a maximum of 400,000 won to 500,000 won.
A new 'lease trust' system will be introduced, allowing tenants to deposit their lease funds with a public stabilization organization instead of directly paying landlords. This organization will manage the funds and provide landlords with monthly rental income derived from the investment. Tenants will benefit from deposit protection, while landlords will receive stable income without the risk of late payments. The government plans to start recruiting landlords in September and aims to begin tenant placements by the end of the year, with a pilot supply of 500 units through LH's rental program.
Building regulations for non-apartment structures will also be relaxed. The construction area limit for multi-family and multi-household buildings will increase from 660 square meters to less than 1,000 square meters, and the number of floors for multi-household housing will rise from three to four. Sunlight regulations will be eased, allowing for vertical construction instead of sloped designs for typical four to five-story buildings. The government estimates that relaxing floor regulations alone could increase the number of units by about 33% within the same area.
* This article has been translated by AI.
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