Gov’t to supply 114,000 new public homes

Nov 20, 2020, 09:29 am

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Deputy Prime Minister and Finance Minister Hong Nam-ki speaks during a policy meeting with economy-related ministers at the government complex in Seoul on Nov. 19, 2020./ Source: The Ministry of Economy and Finance

AsiaToday reporter Lee Ji-hoon

The government plans to supply 114,000 public rental houses nationwide over the next two years in a bid to alleviate the shortage of homes offered on “jeonse” leases.

Jeonse is a type of housing lease arrangement unique to Korea, whereby tenants may occupy a residence for an initial two-year period by paying a lump-sum deposit instead of monthly rent.

In a ministerial meeting on the property market on Thursday, Finance Minister Hong Nam-ki announced the latest public housing plans. “Over the next two years, the government plans to supply 114,000 public rental homes, including 70,000 units in the greater Seoul area and 35,000 units in the capital,” the minister said.

The government plans to supply 114,000 units of houses by leasing newly built houses or public homes.

In order to quickly respond to the jeonse crisis, the government plans to supply 49,000 units, or over 40 percent of the target volume, within the first half of next year, of which 9,000 will be in Seoul and 24,000 will be in the surrounding Gyeonggi area.

First of all, some 39,000 public homes that have been vacant for more than three months will be allowed to all homeless, regardless of their income. The government plans to convert unoccupied public rental homes to all home seekers, regardless of their income and asset, in order to even out the demand.

Through purchase contracts with private construction companies, the government will secure newly built multiplex housing units and studio apartments in advance to supply 44,000 houses by 2025, including 20,000 units in Seoul.

The government plans to supply 18,000 units by 2022 by purchasing existing homes and converting them into public jeonse houses, where tenants are allowed to live for up to 6 years in a deposit of less than 90% of market price of the surrounding neighborhood.

It also plans to convert vacant shopping malls and hotels into jeonse homes by 2022.

The government expects such a measure to help resolve the imbalance in supply and demand for jeonse homes. “The latest action is expected to bring up the supply volume of jeonse homes to the conventional level and largely resolve the concerns over a drastic supply shortage over the next two years,” Hong said.

In addition, the government plans to supply quality rental houses.

“The government decided to supply 63,000 quality rental houses for three- to four-person households over the next five years,” the minister said. The size of the mid-sized homes will span 60 square meters to 85 square meters, according to the minister.

The minister said the latest measures are aimed to help relieve the rental housing shortage, instead of curbing market demand through regulations.

#jeonse #public jeonse #Hong Nam-ki