SH Corporation "1.3 Trillion KRW Housing Cost Reduction through Public Rental... Tax Support Needed"

Seoul Housing and Communities Corporation (SH Corporation) has been found to reduce the housing costs of Seoul citizens by approximately 1.3 trillion KRW annually by supplying public rental housing. Kim Heon-dong, president of SH Corporation, urged the government to implement tax support measures as the profitability of the business is deteriorating due to increased operating and tax costs for rental housing.

Kim Heon-dong, President of Seoul Housing and Communities Corporation (SH Corporation), is giving an explanation at a press briefing held on the first floor of the SH Corporation headquarters in Gaepo-dong, Gangnam-gu on the 15th.
[Photo by Kwak Min-jae]

On the 15th, SH Corporation held a press briefing at its headquarters in Gaepo-dong, Gangnam-gu, Seoul, revealing that the contribution of SH public rental housing to reducing housing costs was about 341.8 billion KRW in 2012 and has steadily increased to about 1.2943 trillion KRW in 2022.

Comparing the rental amounts (rental deposits and rents) of 135,441 public rental housing units owned by SH Corporation with private market prices, SH’s rental amounts are only 31.9% of the market price. SH public rental housing consists of 79,288 apartment monthly rent units (59%), 25,797 apartment jeonse (long-term deposit lease) units (19%), and 30,356 purchased rental units (22%). The contribution to housing cost reduction from apartments amounts to 1.2022 trillion KRW, accounting for 93% of the total.

President Kim Heon-dong explained, “Apartment rents in Seoul range from 2 to 3 million KRW per month, but we charge about 1 million KRW per month, saving an average of 12 million KRW annually in rent. The more SH public rental housing increases, the greater the benefits for citizens.”

However, SH Corporation claims that although the public contribution of public rental housing is significantly increasing, its sustainability is gradually diminishing. Operating costs and taxes related to rental housing increase every year, but rental income is only 4-25% of market prices, causing the rental housing business to deteriorate financially.

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. Meanwhile, operating costs for public rental housing increased by 117% from 126.9 billion KRW in 2012 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 rents 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 this year.

Accordingly, SH Corporation plans 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 intends to expand support for public land development and reinvest in the supply and management of high-quality public rental housing.

Additionally, SH Corporation plans to actively propose to the government (Ministry of Economy and Finance, Ministry of the Interior and Safety), and the National Assembly the exemption of property taxes or equivalent support for public rental housing operated on behalf of the government, making various efforts to enhance the sustainability of the public rental housing business.

President Kim Heon-dong stated, “No country in the world, including advanced countries, imposes taxes on public housing that contributes significantly to society.” He added, “I plan to visit the Minister of the Interior and Safety soon to request exemption from property tax and am continuously requesting the Ministry of Economy and Finance regarding comprehensive real estate tax.” He 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.”

Meanwhile, on the same day, President Kim expressed his desire for SH Corporation to participate in the 3rd New Town project being built in Gyeonggi Province. He said, “SH Corporation has the financial mobilization capacity and wants to actively participate in the 3rd New Town for the residents of Gyeonggi Province and Seoul citizens,” adding, “We will consult with the heads of adjacent local governments in Gyeonggi Province to deliver SH Corporation’s excellent system.”

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