[Financial News] The Ministry of Land, Infrastructure and Transport announced on the 30th that it will begin accepting applications for the first tenants of 1,091 units of conversion-type purchase rental housing in nine cities and provinces nationwide starting from the 31st.
Purchase rental housing involves acquiring or newly constructing quality housing in urban areas and directly supplying it as public rental housing. It offers the advantage of allowing residents to live with peace of mind at low rental costs for extended periods.
The newly introduced conversion-type purchase rental housing allows tenants to live on rent for a minimum of six years before deciding whether to purchase the property. The Ministry plans to provide ‘medium-sized’ homes, including apartments, in excellent locations.
The first announcement for tenant recruitment includes 317 units of monthly rental housing (for newlyweds and newborns) and 774 units of ‘Ddeunddeun Jeonse’ (a type of deposit-based rental), totaling 1,091 units. Notably, 961 of these units will be in the metropolitan area, with 225 in Seoul, 371 in Gyeonggi, and 365 in Incheon.
The conversion-type purchase rentals are divided into Ddeunddeun Jeonse and monthly rental categories. The Ddeunddeun Jeonse type is available as 90% of the market price regardless of income or asset conditions, while the monthly rental type targets those eligible for newlyweds and newborn purchase rentals.
The conversion process applies to residents who meet specific income and asset requirements upon moving in. The income requirement is set at 130% (200% for dual-income households) of the previous year’s average monthly income for urban workers, and the asset requirement is less than 362 million won.
Tenants can choose freely whether to convert their rentals into purchases after living for six years without using a separate subscription account. Those who do not wish to purchase or exceed income/asset criteria can continue to reside as tenants, similar to general purchase rental housing. The maximum residency period is 6+2 years for the deposit-based type and 6+4 to 14 years for the monthly rental type.
Moreover, the sale conversion price is calculated based on the average of the appraised value at the time of move-in and the appraised value at the time of sale six years later. If house prices rise significantly, the appraisal value at the time of sale will be capped, reducing the financial burden.
Ki-bong Lee, Director of the Housing Welfare Policy of the Ministry of Land, Infrastructure and Transport, stated, “In addition to the initial supply of conversion-type purchase rental housing, we will ensure the smooth supply of 110,000 new purchase rental units to stabilize the non-apartment market and achieve national residential stability.”