[Beginner's Guide to Real Estate] Want to Live in a New Building but Finding Subscription Difficult? ... Aim for Pre-sale and Move-in Rights

[Asia Economy Reporter Lee Chun-hee] When you become a real estate reporter, you often get unexpected KakaoTalk messages from friends. "How do I apply for a housing subscription?" "What does first priority mean?" For the 2030 'Burin-i (Real Estate + Beginner)' who only have subscription savings accounts created by their parents when they were young, I have prepared a guide.

Recently, subscription applications in the metropolitan area have become increasingly difficult, with the minimum winning score rising above 60 points. Although many Burin-i want to live in new apartments, applying for subscriptions is challenging. However, there is a way for them to find a path: buying the rights to move into a new apartment. These rights include 'Ipjoo-gwon (Move-in Rights)' and 'Bunyang-gwon (Pre-sale Rights).' Both rights grant the ability to live in a new apartment, but their details differ slightly. Today, let's explore how these two rights differ.

First, Ipjoo-gwon is granted to 'association members.' In redevelopment or reconstruction projects, a union is usually established to oversee the project. Once the management disposition approval is completed, association members receive Ipjoo-gwon. After approval, the existing housing is considered demolished, and the right to move into the newly built apartment is granted.

The price of Ipjoo-gwon typically includes the appraisal value of the existing building, settlement payments, and premiums. Since the purchase cost must be paid within a short period, the financial burden is considerable. However, when considering the total cost, Ipjoo-gwon tends to be cheaper than Bunyang-gwon.

On the other hand, Bunyang-gwon is the right obtained when a general buyer signs a sales contract with the developer. Apartments built by redevelopment projects or regional housing cooperatives, not by the government, Korea Land & Housing Corporation (LH), or local public corporations, are primarily allocated to association members. This right is Ipjoo-gwon. The remaining units are supplied to the general public through 'general sales.' Recently, due to supply shortages nationwide, competition for these sales has surged.

Generally, the general sales price is set higher than the association members' price. This is because if the project is delayed or costs increase, the additional expenses are borne by the association members, not the general buyers. If general sales are undersubscribed, association members may face additional contributions, meaning they bear the risk but also gain more profit.

However, recently, amid government price controls, there is a possibility that general sales prices may be lower than association members' prices. Some associations are struggling to maintain profitability by handling general sales units through bulk sales, leasing before sale, or other methods instead of direct sales.

Nevertheless, even if the general sales price is higher than the association members' price, it is still considered advantageous. Due to price controls, sales prices are often set below market value, creating 'lottery sales' where prices in Gangnam can be up to 1 billion KRW lower than surrounding market prices.

The financial burden is also lighter than with Ipjoo-gwon. After paying a contract deposit of about 10-20% of the sales price, the middle payments, usually 60%, can be paid over 2-3 years, and the final payment is made at move-in, allowing buyers to extend their financing period even if they lack immediate funds.

Among Bunyang-gwon and Ipjoo-gwon, Ipjoo-gwon often represents better properties. Since general sales occur after association member sales, prime units such as south-facing 'royal buildings' and 'royal floors' are usually taken by Ipjoo-gwon holders, leaving Bunyang-gwon units concentrated on lower floors or less desirable layouts like tower types rather than slab types. Additionally, during the bidding process, developers often provide free options such as home appliances or balcony expansions to association members, reducing costs beyond the housing price.

Amidst being exempt from various regulations, the pre-sale transfer restriction period is only 6 months, attracting many applicants to 'Maegyo Station Prugio SK View' in Paldal-gu, Suwon-si, Gyeonggi-do.

There are also precautions when purchasing Bunyang-gwon or Ipjoo-gwon. It is important to remember that these are 'rights.' Since these rights pertain to housing not yet completed, there is always a risk of project delays or other issues. Also, since the project is ongoing, additional charges may arise for Ipjoo-gwon holders, and for Bunyang-gwon holders, middle and final payments must still be made, so these amounts should be included in the purchase price consideration.

Moreover, not everyone can freely buy or sell these rights. For Bunyang-gwon, some complexes legally restrict transactions from at least six months after the winner announcement until the ownership transfer registration (move-in time). Transactions during the resale restriction period are invalid, so careful attention is required. Especially in Seoul, all complexes currently under construction have resale restrictions until move-in, meaning Bunyang-gwon, not Ipjoo-gwon, cannot be traded.

This content was produced with the assistance of AI translation services.