Factory Conversions to Residential Use... Over 100,000 Rental Units Supplied (Comprehensive)

Government to Announce 'Jeonse Measures' on 18th
Focus on Purchase Rental and Jeonse Rental Plans
First Introduction of Purchase Agreement Method
Remodeling Supply Extends to Commercial, Office, and Factory Spaces

On the 8th, the view of apartment complexes in Seoul city from the Seoul Sky observatory at Lotte World Tower, where Seoul apartment prices have been rising for the 18th consecutive week and Jeonse prices for the 67th consecutive week. According to the weekly apartment price trend announced by the Korea Real Estate Agency on that day, as of the 5th, Seoul apartment sale prices rose by 0.01% and Jeonse prices by 0.08%, showing only a 0.01 percentage point decrease compared to the previous week's increase. Photo by Hyunmin Kim kimhyun81@

[Asia Economy Reporter Jang Sehee] The government is set to announce a comprehensive jeonse (long-term lease) plan this week, with the total supply volume confirmed to reach 100,000 units plus alpha. This figure far exceeds the initially expected scale of several thousand to tens of thousands of units. To achieve this, commercial buildings, offices, and factories will also be converted into rental housing for supply.

According to related ministries including the Ministry of Land, Infrastructure and Transport, the Ministry of Economy and Finance, and the Seoul Metropolitan Government on the 16th, the government plans to announce the "Housing Stability Measures for Low- and Middle-Income Classes" containing these details on the 18th. This jeonse measure is a response to the so-called "jeonse crisis," which has occurred as housing prices in Seoul, the metropolitan area, and provinces have simultaneously risen and jeonse supply has sharply decreased following the implementation of the three lease laws. In fact, according to the weekly apartment price trend for the second week of November announced by the Korea Real Estate Board on the 12th, as of the 9th, the jeonse price of apartments in Seoul rose by 0.14%, an increase from the previous week’s 0.12%.

A government official stated, "We are reviewing not only purchase rental and jeonse rental but also the purchase agreement method," adding, "We will ensure the supply of 100,000 units plus alpha in Seoul and the metropolitan area." The government is finalizing plans to maximize the supply of public rental housing, mainly in the metropolitan area, to be available by the first quarter of next year at the latest.

This measure centers on the Korea Land and Housing Corporation (LH) purchasing vacant houses for rental under the "purchase rental" method and leasing them again as jeonse under the "jeonse rental" plan. Since the purchase rental and jeonse rental methods target existing houses, they are expected to have some effect by supplying housing to the market in a short period.

Additionally, to secure the maximum supply volume, the government plans to introduce the "purchase agreement" method for the first time. The purchase agreement method involves LH signing a purchase agreement before completion for houses (multi-family and multiplex) planned or under construction by private developers, then purchasing them after completion to use as rental housing. However, since this method targets houses not yet built, the supply timing may be later than the purchase rental and jeonse rental methods. Furthermore, the government plans to remodel commercial buildings, offices, and factories into residential use to supply rental housing.

Meanwhile, the current plan does not include expanding the monthly rent tax credit. A government official said, "The monthly rent tax credit is unrelated to jeonse supply," and added, "This plan focuses on expanding the supply volume of jeonse." Currently, non-homeowner households with an annual total income of 70 million KRW or less receive a monthly rent tax credit benefit up to 7.5 million KRW when residing in housing with a standard market price not exceeding 300 million KRW.

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