To normalize the supply of non-apartment housing, improvements in loan regulations and building standards are necessary, experts say.
Kim Deok-rye, a senior researcher at the Korea Housing Industry Institute, stated at a forum on expanding housing supply for public stability that "to normalize non-apartment projects, much of the uncertainty for the future needs to be removed."
Kim emphasized that non-apartment housing is closely linked to the rental market, private rental housing, and multiple homeowners, and thus related systems must be designed together. He noted, "Even the projects that are currently built or those that were prepared to be built have come to a standstill."
The primary reason for project delays is identified as the loan-to-value (LTV) regulations. The government restricted housing loans for buyers and rental businesses in the metropolitan area and regulated zones through supply measures last year, making it difficult for non-apartment developers to secure funding.
Kim explained, "The reason projects have stalled is that the LTV has been significantly reduced, leading to strict lending constraints. Although the government promised to create funds and guarantee products for non-apartments, they are still not available, so they need to be established promptly."
He also pointed out that building standards need to be updated to reflect current realities. Currently, multi-family and row houses are subject to standards established in 1999, which limit them to four stories or fewer. This restriction makes it challenging to secure project viability and limits the supply of quality non-apartment housing.
Kim stated, "The restrictions on the number of stories for multi-family and row houses are excessive," adding that there needs to be a significant change in residential area and story limits. He continued, "If that happens, citizens who feel housing insecurity regarding non-apartments will be able to live in quality, safe homes."
There were also calls to extend the exemption for counting housing units for non-apartments to stimulate transactions. Non-apartments have played a crucial role in providing rental housing for low-income individuals, youth, and the elderly, but the combined effects of financial and tax regulations, along with rental fraud, have led to a simultaneous contraction in supply and transactions.
Representatives from the construction industry attending the forum also urged for the easing of loan regulations to expand non-apartment supply. Kang Kyung-hoon, CEO of Jinkyung Construction, remarked, "It is a very difficult process to use banks while regulating the LTV for sales and rental businesses," and requested a relaxation of these rules.
Kang also noted that the special exemption from acquisition tax, comprehensive real estate tax, and capital gains tax for non-apartments priced under 60 million won and 60 square meters will only last for one year and four months, urging for a three-year extension until 2030.
Addressing the supply of non-apartments requires a comprehensive approach that goes beyond simple permit relaxations, focusing on financial support for developers, updating building standards, and recovering demand for purchases and rentals to lead to actual construction and supply.
Kim Yoon-deok, Minister of Land, Infrastructure and Transport, expressed at the forum that he would reflect the opinions from the field in future real estate policies. The market is watching closely to see if the government will include easing LTV regulations for non-apartments, establishing funds and guarantee products, and extending the exemption for counting small non-apartment housing units in its supply measures.
* This article has been translated by AI.
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