Twenty-one buyers have reportedly withdrawn from the Magok M Valley 17 land lease housing complex in Seoul, which is set to open at the end of this month. Winners of the lottery are expressing difficulties in securing financing due to the application of a loan limit exemption, but it remains unclear how many of those who withdrew did so specifically because of loan issues.
The Seoul Housing and Communities Corporation (SH) stated on August 14 that it has identified approximately 21 contract cancellations. Including these withdrawals, the total number of individuals who have exited the contract process, including disqualifications, is around 71.
The core of the controversy revolves around the 'loan limit exemption' applied to land lease housing. This exemption is designed to protect the priority repayment amount for tenants in the event of a foreclosure, by excluding that amount from the loan limit.
The Magok 17 complex, located in the Magok district of Gangseo-gu, Seoul, is a land lease housing project where the land is publicly owned, and buyers only purchase the building. The selling price for a 59-square-meter unit ranges from approximately 290 million to 340 million won, making it significantly cheaper than typical apartments, hence the nickname 'half-price apartments.'
Prospective residents argue that the 55 million won loan limit exemption places a relatively heavy burden on them, given the lower selling price. They particularly question the fairness of applying the same exemption, which is intended to protect tenants, to a project with a five-year residency requirement.
Currently, under the loan-to-value (LTV) ratio of 60%, the 55 million won exemption reduces the actual loan amount available for a 59-square-meter unit to approximately 120 million to 150 million won, requiring winners to provide around 170 million to 190 million won in personal funds.
The government introduced financial support measures in 2022, including a maximum LTV of 80% and a loan limit of up to 500 million won for the shared public sale program. The Magok 17 complex had a pre-reservation process in September 2023, but due to tightened household debt management, the current applicants are subject to a 60% LTV and the loan limit exemption. Winners argue that it is inequitable for loan conditions to vary based on the application date, even for the same complex and unit type.
Prospective residents are demanding at least the exemption be removed. They contend that since land lease housing has a lower selling price, applying the same 55 million won exemption as for regular housing contradicts the purpose of the system.
In general, mortgage loans can sometimes be obtained without deducting small tenant security deposits when using mortgage credit guarantees. However, the loans available to applicants of the Magok 17 complex do not include such guarantees, resulting in the application of the 55 million won exemption.
An SH official stated, 'Because land lease housing has a lower selling price, the burden of the loan limit exemption may feel relatively heavier than for other housing types. We believe that the exemption from the loan limit is necessary for public sale housing, which has a five-year residency requirement and a ten-year resale restriction.' The official added that they are continuously urging the Ministry of Land to relax loan conditions for applicants.
In contrast, the Ministry of Land and Transport maintains that it is difficult to make exceptions to the loan limit exemption. A ministry official stated, 'The loan limit exemption is legally applicable to everyone, so there cannot be exceptions.' The official further explained, 'All housing, including land lease housing, is subject to the loan limits in place at the time, and since land lease housing is not handled by commercial banks, funding must align with the products created by government policy.'
* This article has been translated by AI.
Copyright ⓒ Aju Press All rights reserved.