"Demand for Association Membership Fees in Social Housing Move-ins" Seoul Metropolitan Government Audit Committee Notifies 17 Measures Following 'Social Housing' Investigation Results

Over 7 Years, 210.3 Billion Won Invested but Only 24.5% Occupancy Achieved... Actual Supply Just 847 Units
Conflict of Interest Cases Found, Including Association Director Evaluating Chairman's Company During Contractor Selection
Ethical Lapses Also Discovered, Such as Social Investment Fund Manager Providing 'Self-Loans' to Own Company

[Asia Economy Reporter Lim Cheol-young] The Seoul Metropolitan Government Audit Committee announced on the 14th that it completed an investigation into the implementation status and performance of the social housing project, which has been promoted since 2015, and notified the relevant departments on the 10th of 17 administrative measures, 1 personnel measure, and the investigation results.

Earlier, Seoul City conducted an overall review of the project focusing on supply effectiveness, fairness in the selection of implementers, and sustainability of the project, following continuous concerns that the social housing project had underperformed in supplying rental housing and was vulnerable in protecting tenants, contrary to the original policy intent. The investigation results are planned to be reflected in the future restructuring of the social housing project.

The Seoul City investigation revealed issues such as ▲minimal actual housing supply effect ▲restriction of housing opportunities for vulnerable groups due to unfair tenant selection ▲conflicts of interest in the selection process of project operators ▲moral hazard including privatization of funds by some companies related to the Social Investment Fund.

First, the actual housing supply effect of Seoul City's social housing project was only 847 units over the past seven years. Although Seoul City allocated and invested a budget of 210.3 billion KRW over seven years since 2015, the number of social housing units currently available for occupancy or confirmed for occupancy by the end of this year is 1,712 units, which is only 24.5% of the 7,000-unit target by the end of 2021. Moreover, excluding 865 purchased rental housing units (social housing) provided by SH Corporation to social economy entities as social housing, the actual supply effect was limited to 847 units. There were also cases where companies were selected as operators just 1-2 months after establishment, or where representatives and registered directors overlapped between companies.

Furthermore, SH Corporation provided 865 purchased rental housing units to vulnerable groups for housing stability as social housing, but social housing operators set tenant selection criteria favoring specific backgrounds or activities such as labor unions and NPOs, resulting in restricted housing opportunities for vulnerable groups. Some social housing operators required union membership, cooperative membership fees, or contributions as eligibility criteria and gave additional points for union membership or NPO activity experience, which were cited as representative cases.

Conflicts of interest were also found in the selection process of social housing operators, undermining fairness. For example, a director of the Korea Social Housing Association, who is also the representative of a social housing company, participated as a judge in the evaluation of that company, or judges who previously served as representatives of certain companies participated in the evaluation of those companies, frequently violating recusal and avoidance rules.

In the selection process of private consignment companies for the Social Housing Comprehensive Support Center, illegal cases were found such as selecting companies that did not meet the qualification criteria stipulated by ordinance (first term) and pressuring SH Corporation to withdraw from the public offering (second term). Problems such as violating tripartite agreements among autonomous districts, operators, and vacant house owners and arbitrarily changing the operating entity were also revealed.

Additionally, moral hazards such as 'self-lending' and attempts to privatize funds by some companies related to social housing and the Social Investment Fund were uncovered. It was confirmed that the representative of a company selected as the Social Investment Fund operator received an interest-free loan from Seoul City and re-lent the funds to companies where they were the representative or registered director. The Social Investment Fund loaned to social housing operators amounts to 32.815 billion KRW (current outstanding loan balance of 13.083 billion KRW), with bonds maturing this year totaling 4.132 billion KRW. Some companies are overdue and have not repaid despite the maturity date passing.

After acquiring 13 social housing projects of Draw Housing Cooperative, which caused a tenant deposit non-return incident in 2019, the social housing management company claimed to have repaid tenant deposits without Seoul City's support, but it was revealed that they received a 300 million KRW loan from the Social Investment Fund and repaid the tenant deposits in February last year.

Lee Idong, Seoul City's Public Audit Officer, said, "We conducted an investigation to understand the implementation status of the social housing project, which has been raised as an issue by the media, the city council, and the National Assembly, and disclosed a summary of the investigation to guarantee citizens' right to know. We have notified the relevant departments of the investigation results to ensure that the social housing project can be restructured into an effective, fair, and sustainable project, and after a one-month reconsideration period, we will disclose the final audit results in December."

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