'Relaxing the 900 Million Won Market Price Standard'... The Housing Pension Amendment Bill That Has Fallen Through

Ahead of the End of the 20th National Assembly, Disposal Process
Failed to Change Housing Price from Market Price 900 Million to Official Price 900 Million or Less... Expansion to Residential Officetels Also Unlikely
What About Elderly 'House Poor' with Only One Home?

[Asia Economy Reporter Haeyoung Kwon] The plan to expand the housing pension, a national retirement preparation measure, to include properties with a publicly announced price of 900 million KRW or less and residential officetels has effectively fallen through as the 20th National Assembly nears its end. Some elderly retirees who have no income or assets other than a single home remain in a 'house poor' situation, having to continue living frugally due to insufficient retirement funds.

According to the financial sector on the 19th, the amendment to the Korea Housing Finance Corporation Act (Housing Finance Act), which has been pending in the Legislation and Judiciary Committee ahead of the 20th National Assembly's conclusion on the 29th, is expected to be automatically discarded. The National Assembly repeatedly faced disruptions at the end of last year, and the Financial Services Commission, the relevant ministry, prioritized passing the Credit Information Act and the Financial Consumer Protection Act, pushing the Housing Finance Act amendment to the back burner.

A Financial Services Commission official said, "With the 20th National Assembly session nearing its end, it is difficult to amend the Housing Finance Act," adding, "We plan to re-pursue the amendment based on the previously announced housing pension activation plan in the next session."

The core of the Housing Finance Act amendment was to change the housing price criterion for housing pension eligibility (currently 900 million KRW or less) from market price to publicly announced price. The Financial Services Commission announced early last year in its work plan its intention to raise the housing price ceiling and released a housing pension activation plan including this in November.

While the standard for high-priced housing has lowered due to rising house prices, the 11-year-old market price ceiling of 900 million KRW since 2008 has excluded some elderly from housing pension eligibility. Both ruling and opposition lawmakers, including Choi Jae-sung of the Democratic Party and Kang Hyo-sang of the United Future Party, proposed bills to abolish the housing price ceiling more strongly than the government plan, and it was expected that there would be little opposition if the bills passed, but they were only submitted to the Legislation and Judiciary Committee.

Efforts to expand housing pension eligibility to residential officetels and single- or multi-family houses rented out under jeonse (long-term deposit lease) were also pursued but failed to produce results. The Financial Services Commission also announced plans to propose an amendment allowing spouses to automatically inherit the pension upon the death of the housing pension subscriber, but there has been no progress. Currently, a spouse can inherit the housing pension only with the consent of the children.

The only achievement by the Financial Services Commission last year was lowering the housing pension subscription age from 60 to 55 years old. This was possible solely through the amendment of the enforcement decree of the Housing Finance Act, which the Financial Services Commission has authority over, and did not require National Assembly approval. The Financial Services Commission anticipated that about 1.15 million households could newly subscribe to the housing pension due to the lowered age requirement.

However, with the key measure of relaxing the housing price limit for housing pension activation falling through, elderly people who own a single home valued over 900 million KRW at market price are expected to continue living as house poor until the eligibility criteria are eased.

Nonetheless, as the median price of apartments in Seoul has surpassed 900 million KRW, criticism continues that maintaining the housing price limit at 900 million KRW market price, due to concerns over the 'wealthy controversy,' is unrealistic. Korea's proportion of non-financial assets, including real estate, among total assets is 74.4%, higher than other countries such as the United States (30.5%), Japan (37.8%), and the United Kingdom (47.2%), underscoring the need to activate the housing pension. Currently, a 60-year-old owning a 900 million KRW home can receive a maximum monthly housing pension of 1.79 million KRW, which significantly aids retirement life. The higher the property value, the lower the risk of loss, resulting in less impact on national finances.

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