Rebuttal and Counter-Rebuttal... LH Sparks Controversy Over High-Priced Purchase of Rental Housing

by Park SeungUk

Published 03 May.2024 12:07(KST)

"If You Have Money for Purchase Rental, Build Twice as Many Houses"

Korea Land and Housing Corporation (LH) has rebutted the claim by the Citizens' Coalition for Economic Justice (CCEJ) that it buys purchase-rental housing at inflated prices, but the controversy is escalating as CCEJ released a counter-rebuttal on the 3rd.

Photo of Korea Land and Housing Corporation (LH). [Photo by Yonhap News]

In its counter-rebuttal, CCEJ stated, "If public housing corporations directly build public housing on public land, they can supply twice as many public houses to low-income citizens for the same amount of money compared to purchase-rental housing," and criticized LH by saying, "LH is neglecting its fundamental role and focusing only on distributing taxpayers' money to private contractors."

At a press conference held on the 2nd, CCEJ revealed that LH wastes tax money by purchasing purchase-rental housing through a 'pre-agreed purchase' method, where LH makes prior agreements with private construction housing and buys them after completion. According to CCEJ's analysis, LH's purchase price for purchase-rental housing was up to 390 million KRW more expensive than Seoul Housing and Communities Corporation (SH) Wirye District A-1 12BL (Wirye Forest Shine Complex 15) for an exclusive area of 82㎡. This is because the purchase-rental housing was bought through the pre-agreed purchase method, which reflects private contractors' land acquisition costs and construction costs during the construction of new housing.

On the same day, LH rebutted by stating, "The Wirye Forest Shine Complex 15 secured land at a low price through expropriation after releasing the greenbelt on the outskirts of the city," and added, "It is unreasonable to simply compare this with the new construction purchase agreement project where the corporation purchases housing within the city."

However, CCEJ counter-rebutted the next day, saying, "LH's rebuttal only points out that the price of public land is lower than that of private land but hides the fact that its original function is to build public housing on public land," and added, "LH sells public land secured through compulsory expropriation rights to private construction companies and uses that money to buy purchase-rental housing at high prices in the city."

CCEJ also countered LH's rebuttal that there is a time difference in comparing LH's purchase-rental housing with SH apartments. LH stated, "The project period for Wirye Forest Shine Complex 15 was from October 2018 to May 2021, and there is a time difference with newly constructed purchase agreement housing after 2021, when construction raw material prices surged due to COVID-19 and supply chain crises." In response, CCEJ said, "The purchase-rental housing compared to the Wirye District was pre-agreed purchased in 2021," and added, "Naturally, the houses started construction before 2021, so the project periods inevitably overlap significantly with the Wirye District."

Meanwhile, CCEJ plans to analyze the actual conditions of purchase-rental housing of SH, Gyeonggi Housing and Communities Corporation (GH), and others, and urge improvements to related systems.