The "Public Housing = LH" Formula Broken... Competition System with Private Companies Established

From now on, private construction companies will also be able to directly supply public housing. This breaks the long-standing monopoly of Korea Land and Housing Corporation (LH) on public housing supply, which has been regarded as a sanctuary in the housing market.

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On the 12th, the government announced an innovation plan for Korea Land and Housing Corporation (LH) that includes measures to expand opportunities for private companies to participate in public housing projects. The Ministry of Land, Infrastructure and Transport stated that following the collapse of the underground parking lot at the LH apartment in Geomdan, Incheon in April due to missing rebar, and subsequent discoveries of missing rebar in other LH apartments, they have been preparing the LH innovation plan.

The innovation plan primarily includes expanding private companies' participation in public housing projects, which were previously monopolized by LH. While maintaining the same standards for sale prices and supply criteria as current public housing, the plan aims to realize private-led public housing projects by amending the Public Housing Act. The intention is to preserve the purpose of public housing projects led by LH but shift from a monopoly to a competitive system.

The authority LH holds over selecting contractors will also be revoked. The authority to select design and construction contractors for public housing will be transferred to the Public Procurement Service, and the authority to select and manage supervision contractors will be transferred to the Korea Infrastructure Safety & Technology Corporation. LH will be responsible for managing the performance of the selected contractors.

As a result, LH's dominance in the public housing construction market is expected to weaken. In particular, with key functions being transferred to other agencies, a major reorganization of the LH organization appears inevitable.

The reform plan also includes strengthening the reemployment screening for retirees from grade 2 or higher to grade 3 or higher to address the issue of preferential treatment for former officials at LH. The number of retirees subject to reemployment screening, currently about 30%, will nearly double to about half.

To fundamentally prevent preferential treatment for former officials, companies employing former LH officials who held positions at the department head level or higher will be restricted from bidding on public construction projects issued within 'three years after retirement' of the respective retiree. The number of companies monitored for former official employment will also be significantly increased from the current approximately 200 to about 4,400.

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