Concerns Over Reduced Supply for Middle-Sized Rentals as Income Requirements Increase for Seomin

Up to 150% of Median Income Possible
Concerns Over Relative Decrease in Low-Income Quota
Government "60% Priority Supply to Existing Rental Tenants"

Time Until Actual Move-In Also an Issue
Government "63,000 Households to Be Supplied by 2025"
But Based on 'Project Approval'... Move-In Earliest After 2025

[Asia Economy Reporter Lee Chun-hee] The government’s supply of medium-sized rental housing for middle-class tenants is drawing both anticipation and concerns. While the opportunity for the middle class, who are experiencing a jeonse crisis, to live in high-quality public rental housing comparable to private standards has expanded, there are worries that the supply of rental housing for low-income households may decrease.

According to the Ministry of Land, Infrastructure and Transport on the 20th, the government will supply 'medium-sized rental housing' by increasing the area of public rental housing up to 85㎡ (exclusive area) to absorb middle-class rental demand. This means that 30-pyeong (approximately 99㎡) sized homes suitable for families of 3 to 4 people will also be available as public rental housing. Currently, public rental housing is supplied only up to 60㎡.

The plan to supply medium-sized rental housing, branded as 'high-quality lifelong housing,' includes providing 63,000 units of medium-sized rental housing between 60 and 85㎡ through the integrated-type public rental housing and purchased rental housing introduced from next year until 2025.

Residents who meet income and asset requirements can live in medium-sized rental housing for up to 30 years. Even if they exceed the requirements or the residence period expires, they can continue living there under the condition that rent is raised to a level comparable to nearby market prices.

Income requirements have also been raised. Initially, the integrated-type public rental housing was planned to apply a standard for up to 56㎡ with a maximum of 130% of the median income. However, with the inclusion of medium-sized rental housing, the maximum area has increased to 85㎡, and the income requirement has been raised to up to 150% of the median income. This corresponds to a monthly income of 5.81 million KRW for a 3-person household and 7.12 million KRW for a 4-person household. Asset requirements remain, but the car value standard has been raised from 25 million KRW to 35 million KRW.

However, only households with three or more members are eligible for medium-sized rental housing. The government plans to block 1- to 2-person households from moving into medium-sized rental housing by setting allowable areas based on household size.

The housing quality, which has been cited as a factor deterring middle-class tenants from moving in, will also be improved. Key finishing materials such as door locks and flooring will be upgraded to the level of sale housing, and suppliers with defective materials will be penalized or excluded from procurement.

Minister of Land, Infrastructure and Transport Kim Hyun-mi is announcing support measures for housing stability for low-income and middle-class citizens at the Government Seoul Office in Jongno-gu on the 19th. Photo by Kang Jin-hyung aymsdream@

The actual effect of the policy is expected to take some time. The government currently plans to supply 53,000 units of constructed medium-sized rental housing by 2025. The supply will gradually increase from 1,000 units in 2021 → 6,000 units in 2022 → 11,000 units in 2023 → 15,000 units in 2024 → and 20,000 units annually from 2025 onward.

However, although the government has set the project approval date as the supply point, the actual perceived supply time is expected to be later. Among the six integrated public rental pilot sites selected by the government, totaling 1,200 units, the earliest to begin construction are 400 units in Seongnam Nakseong and 100 units in Daejeon Industrial Complex in 2022. Since rental housing supply is considered effective at the point just before occupancy, the medium-sized rental housing is expected to start impacting the rental market no earlier than after 2025.

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