SH Corporation Contributes 1.3 Trillion Won to Public Rental Housing Cost Reduction... 3.8 Times Increase Over 10 Years

Seoul Housing and Communities Corporation (SH Corporation) announced on the 15th that by supplying public rental housing, it effectively reduces the housing costs of Seoul citizens by approximately 1.3 trillion KRW annually.

[Image courtesy of Seoul Housing & Communities Corporation]

SH Corporation explained that when comparing the rental fees (rental deposits and rents) of 135,441 public rental housing units owned by the corporation with private market prices, SH rental fees amount to only 31.9% of the market price. In particular, it was reported that the contribution to housing cost reduction for Seoul citizens living in SH public rental housing is estimated to reach 1.2943 trillion KRW.

According to SH Corporation’s survey, the contribution to housing cost reduction from SH public rental housing has steadily increased from about 341.8 billion KRW in 2012 to approximately 1.2943 trillion KRW in 2022. SH public rental housing consists of 79,288 apartment monthly rent units (59%), 25,797 apartment jeonse (long-term lease) units (19%), and 30,356 purchased rental units (22%). The contribution to housing cost reduction from apartments alone amounts to 1.2022 trillion KRW, accounting for 93%. When including public rental housing owned by Seoul City and REITs managed by SH Corporation, the total number of units reaches 220,000, with a housing cost reduction contribution of 2.0983 trillion KRW.

[Image provided by Seoul Housing & Communities Corporation]

By rental housing type, the contribution to housing cost reduction per unit was highest for long-term jeonse housing at 14.17 million KRW. Notably, this figure increased 9.6 times from 1.47 million KRW in 2012 to 14.17 million KRW in 2022, showing a greater housing cost reduction effect compared to other rental housing types. In 2022, the contribution per unit for other rental housing types was 9.72 million KRW for redevelopment rental housing, 11.92 million KRW for national rental housing, and 9.02 million KRW for permanent rental housing.

However, although the public contribution of SH public rental housing is increasing, its sustainability is gradually diminishing. Operating costs and taxes related to rental housing are rising annually, but rental income remains only 4-25% of market prices, causing the rental housing business balance to deteriorate.

As of 2022, SH public rental housing operating costs, including maintenance expenses, reached 274.9 billion KRW, while rental income was only 153.1 billion KRW. Operating costs for public rental housing, which were 126.9 billion KRW in 2012, increased by 117% to 274.9 billion KRW in 2022, and property taxes rose by 641% from 9.4 billion KRW to 69.7 billion KRW. Over the past 20 years, SH Corporation has raised rental fees for seven types of rental housing based on construction costs (permanent, national, public, redevelopment, residential environment, purchased rental, and other rentals) only twice (in 2011 and 2023).

Meanwhile, property taxes such as property tax and comprehensive real estate tax imposed on SH public rental housing have surged from 9.4 billion KRW in 2012 to 69.7 billion KRW in 2022 following the enactment of the Local Tax Special Cases Act.

SH Corporation has set a policy to strengthen the authority over the supply types and rent determination of public rental housing to enhance the sustainability of public rental housing operations. Based on this, it plans to expand support for public land development and reinvest in the supply and management of high-quality public rental housing.

Additionally, SH Corporation intends to actively propose to the government (Ministry of Economy and Finance, Ministry of the Interior and Safety), the National Assembly, and others the need for exemption from property taxes or equivalent support for public rental housing operated on behalf of the government, and will make various efforts to improve the sustainability of the public rental housing business.

Kim Heon-dong, President of SH Corporation, emphasized, “It is necessary to improve the system so that more housing-vulnerable groups can live in public rental housing with significant social contributions by exempting property taxes or providing equivalent government support.”

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