Seoul City Conducts Comprehensive Audit of Social Housing... Removal of Incompetent Companies, SH Considers Direct Projects

In-depth Audit of Business Practices... Restructuring Towards a Sustainable Direction

[Asia Economy Reporter Kim Hyemin] The Seoul Metropolitan Government has launched an audit of the entire 'social housing' project initiated by Park Won-soon. This decision comes amid assessments that the project’s performance has fallen short of initial targets and that tenant protection remains weak. Through the audit, poorly performing contractors will be removed, and strict accountability will be enforced for any improper actions.

On the 1st, Seoul City announced, "We will conduct an in-depth audit of the social housing project, which has recently faced criticism, to thoroughly examine its current status," adding, "We will also undertake policy restructuring efforts to establish a sustainable business model going forward."

Social housing is a project launched in 2015 to provide stable rental housing at affordable rates for socioeconomically vulnerable groups such as persons with disabilities, the elderly, and young single-person households. It is implemented in cooperation with private entities such as social enterprises and social cooperatives. The city has supported social housing operators not only through loans for construction costs but also by subsidizing project expenses, loan interest, and offering low-cost land leases.

However, Seoul City pointed out that the supply of social housing has not met the original target plans. As of the end of last year, the supply target was 4,500 units, but only 2,783 units were actually supplied, achieving just 61.8%, and among these, only 1,295 units were fully occupied.

Limitations in tenant protection have also been revealed. For example, in 2019, D Cooperative, which operated 200 units across 17 social housing sites, suspended its operations due to increased financial burdens. Social Housing Management, established jointly by five member companies of the Social Housing Association, took over 13 sites (152 units), but operations were halted at 4 sites (48 units).

During this process, some tenants in social housing in Seodaemun-gu have yet to receive their security deposits back, resulting in unreturned rental deposits. Meanwhile, D Cooperative received 800 million KRW in remodeling subsidies for social housing and a social investment fund loan of 685 million KRW. Of the loan amount, 247 million KRW is currently classified as long-term delinquent debt.

Seoul City also noted that although the Special Act on Private Rental Housing was amended in August last year to mandate social housing operators to subscribe to rental deposit return insurance, many have yet to do so due to high debt ratios and weak collateral, raising concerns about the project’s sustainability.

Through the audit, the city plans to expel social housing operators found to be negligent or fraudulent and hold them strictly accountable for any improper or illegal activities. Additionally, to establish a sustainable social housing business model, Seoul Housing and Communities Corporation (SH) will actively consider directly managing the project.

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