'Hyoja Housing' Saves 12 Million Won Annually in Living Expenses Per Household

[K-Construction, A New Leap] SH Gongsa
Introduced in 2007, Supplied 34,932 Households
Saved 3.6 Trillion Won in Housing Costs Over 10 Years
Deposit Increase Restricted, Immediate Return Upon Eviction

Seoul Housing and Communities Corporation (SH Corporation) has been reported to save an average of 12 million KRW per household annually in housing costs through the long-term jeonse housing it supplies. Over 10 years, this amounts to a contribution of 3.6 trillion KRW to society.

SH Corporation Headquarters Building

Long-term jeonse housing is a type of public rental housing first supplied in June 2007 under the slogan "A home is not something to buy, but a place to live." These are jeonse apartments that allow residents to live for up to 20 years, with a total of 34,932 units supplied combining those owned by SH Corporation and the Seoul Metropolitan Government.

From the perspective of tenants, the advantages of long-term jeonse housing include the ability to reside for up to 20 years on a jeonse lease. Additionally, residents can live at less than half the market jeonse price. On average, the deposit for the entire complexes is set at 280 million KRW, about half of the market price of 600 million KRW. For example, the Gangseo Balsan 2 complex, initially supplied, is estimated at 23% of the market jeonse price, and the Gangnam Segok 2-3 complex at about 42% of the market price.

Deposit increases during contract renewals are limited within legal bounds. If the deposit exceeds 80% of the surrounding market price, the excess is refunded, and deposits are returned immediately upon moving out, eliminating concerns about jeonse fraud.

The area of long-term jeonse housing mostly ranges from 59 to 84 square meters of exclusive use area, with an average size of 72.1 square meters. The average residency period is also quite long, at 9.6 years.

From SH Corporation’s standpoint, holding long-term jeonse housing over a long period has significantly increased asset value. Since the initial supply in 2007, the asset value of long-term jeonse housing has grown from an acquisition cost of 8.9 trillion KRW to a publicly announced price of 18.7 trillion KRW as of December 2023, and an estimated market price of 27.1 trillion KRW, approximately tripling in value.

Long-term jeonse housing is evaluated as providing affordable and stable housing, lowering surrounding market rents, and contributing to the improvement of individual and family quality of life. In newly developed areas on the outskirts of Seoul, SH Corporation supplies housing through construction, while in urban areas, the Seoul Metropolitan Government supplies long-term jeonse housing through acquisition in redevelopment projects, demonstrating a model case of balanced urban development. SH Corporation has advocated that public land where expropriation is applied should not be sold but used to supply public (rental) housing.

The Seoul Metropolitan Government plans to supply 4,000 long-term jeonse housing units annually starting in 2026, and SH Corporation plans to supply the increasing volume as long-term jeonse housing through the redevelopment of aging public rental housing complexes.

SH Corporation states that policy support such as exemption from comprehensive real estate tax and government subsidies is necessary to continuously supply high-quality long-term jeonse housing in favorable locations. Construction-type national rental housing receives support of 37 million to 54.8 million KRW per household. However, long-term jeonse housing receives no government subsidies. As of 2023, 355 long-term jeonse housing units exceeding the publicly announced price were subject to a total of 6.2 billion KRW in comprehensive real estate tax.

An SH Corporation official said, "Long-term jeonse housing is a proven policy that allows citizens to live long-term in preferred apartments with affordable jeonse deposits," adding, "Policy support such as exemption from comprehensive real estate tax and government subsidies is essential for continuous supply."

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