LH Fueled 'Public Disgust'... 800,000 Housing Supply Plan Loses Momentum

LH Employee Land Speculation Scandal Exposes Public Institution Immorality
Public-Led Projects Like Seoul Public Redevelopment Face Widespread Obstacles
Outraged Residents Shift to Private Redevelopment Amid 'Public Distrust'

An old residential area densely packed in Gwanak-gu, Seoul [Image source=Yonhap News]

[Asia Economy Reporters Onyu Lim and Taemin Ryu] After allegations of land speculation by employees of Korea Land and Housing Corporation (LH) in new towns surfaced, the government's public-led housing supply plans are being completely shaken. The momentum for the 3rd phase new towns, as well as the public redevelopment from the May-June measures last year and the urban public housing complex projects from the February-April measures this year, is significantly declining. As 'public distrust' rapidly spreads, concerns are rising that the government's plan to supply 800,000 households by 2025 could falter.

According to the urban maintenance industry on the 5th, as the land speculation allegations involving LH employees in the 3rd phase new town Gwangmyeong-Siheung district were confirmed to be true, conflicts among residents in areas where public-led development is being promoted in Seoul have deepened. The core of public-led projects is that the private sector receives various incentives in exchange for trusting public institutions and handing over project rights. However, this controversy has exposed the immorality of the public institutions leading the projects and severely damaged the credibility of the government's claim that development will be transparent and fair.

A resident of Area A near the station in Mapo-gu, who was considering the urban public housing complex project after the February-April measures, said, "Because landowners face cash liquidation if they do not hand over their land to the public, the already intense conflict between supporters and opponents has worsened, and LH has poured fuel on the fire." The urban public housing complex project involves high-density development of station areas and semi-industrial zones, and if two-thirds of the owners agree, the project is confirmed. Although it benefits from expedited permits and increased floor area ratio, land transactions are prohibited and land ownership must be transferred to the public, which has caused division among residents. The owner said, "Because there are many merchants and issues with aging, there was no clear development plan, so this project was seen as an opportunity, but this incident has given a definite reason to oppose it," adding, "There are even comments like 'It's dangerous to team up with groups like LH.'"

The controversy has also affected public redevelopment, which had relatively high market support. An owner in Area B, Seodaemun-gu, waiting for the announcement of the second public redevelopment candidate sites, said, "We had been persuading others that since the public was implementing it, it was safe to entrust, but now with the LH scandal, there are concerns that momentum will be lost," and added, "It was already a confusing situation with misunderstandings about public-led direct implementation, and now there are even talks about switching to private redevelopment," expressing frustration.

Another owner in Area C, Mapo-gu, which applied for public redevelopment, also said, "After the LH speculation allegations broke out, public support for public redevelopment disappeared," and added, "Especially young people are greatly outraged and plan to pursue private redevelopment."

Experts believe that as the government's frame of 'public is good' has been broken and public distrust has grown, the process of promoting public-led housing supply, including the February-April measures, will not proceed smoothly. Yang Ji-young, director of R&C Research Institute, said, "Trust in the public has been broken due to the LH scandal," and added, "There will be intensified conflicts during negotiations going forward, and ultimately, the advantage of fast progress in public-led housing supply is likely to be diluted."

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