The South Korean government is moving to purchase uncontracted private housing in regulated areas of the metropolitan region, commonly referred to as 'lotto subscriptions,' and convert them into public rental units. The initiative aims to increase the availability of high-quality public rental housing for the middle class in desirable locations.
On August 13, the Ministry of Land, Infrastructure and Transport announced the establishment of a new type of 'universal public rental housing' that will cater to various income levels for long-term residency.
This plan follows President Lee Jae-myung's remarks at a national forum on real estate policy, where he suggested that constructing high-quality rental apartments near transit hubs would benefit many people.
The government plans to supply universal public rental housing primarily in preferred locations, including the third-phase new towns and central Seoul. The projected supply includes 883 units in the S-10 block of Namyangju's Wangsil, 793 units in the AC2-1 block of Incheon's Gyeyang, and 364 units in the public complex site of Hanam's Gyosan.
The quality of these units will be elevated to match that of private housing. The design will shift from the existing two-bay layout to a three-bay layout, and the finishing materials will be upgraded to enhance the appeal of rental housing.
The target demographic will be divided into two groups: young people without homes and the general population of non-homeowners. More than 50% of the total units will be allocated to young people, who have a high demand for rental housing, while the remainder will be assigned to the general non-homeowner population.
The initial residency period will be set at six years, with extensions granted for each childbirth. Families with three or more minor children will be allowed to stay for up to 20 years.
A new long-term rental type will also be introduced for public-supported private rentals, allowing for leases of 20 years or more in addition to the existing 10-year rental model.
To facilitate this, the Korea Housing and Urban Guarantee Corporation (HUG) will introduce a guaranteed 'long-term mortgage product for rental housing.' This initiative aims to support financing for businesses participating in long-term rentals.
Notably, the government plans to utilize uncontracted private housing from non-priority subscriptions for public rentals. By the end of the year, the government will push for legal amendments to allow the Korea Land and Housing Corporation (LH) to purchase some of the uncontracted units from private sales in regulated areas.
There are plans to grant LH the right of first refusal. Previously, uncontracted subscription units often attracted demand due to price differences with surrounding market rates, but now some of these units may be converted into public rental resources.
However, purchasing uncontracted units in popular areas may raise concerns about fairness in the housing market, along with potential issues regarding LH's purchasing criteria, pricing methods, and financial burdens.
An industry insider noted, 'The so-called 'lotto' units that LH acquires are expected to be primarily located in desirable areas.'
* This article has been translated by AI.
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