During the Park Geun-hye administration, the 'New Stay' (corporation-type rental housing) project, initiated as part of a housing initiative, has completed a minimum 8-year lease obligation period and starting this year, over 600 units will be able to transition to sale.
However, there are no established criteria regarding the timing, pricing, or whether to convert the sales of approximately 18,000 New Stay units, leading to anticipated conflicts between tenants wishing for preferential sales rights and project implementers aiming to maximize profits through general sales.
According to data requested by ChosunBiz from the Ministry of Land, Infrastructure and Transport on the 11th, there are currently 22 New Stay complexes operating nationwide, totaling 18,466 units. The New Stays expiring this year are 'H HOUSE Daelim New Stay' (293 units) and 'e-Pyeonhansesang Terrace Wirye' (360 units).
Next year, 6 complexes (6,292 units) in the first half and 7 complexes (5,567 units) in the second half, totaling 13 complexes with 11,859 units, will reach the end of their mandatory leasing period. In 2027, the leasing contracts for 3 complexes (2,888 units) in the first half and 4 complexes (3,066 units) in the second half, totaling 7 complexes with 5,954 units, will also end.
New Stay is a housing policy initiated by the Park Geun-hye administration in 2015 to enhance the supply of rental housing by increasing the floor area ratio limit and supporting low-interest loans for private corporations.
There are no restrictions on whether to apply for dwellings or income, and if selected, residents can live there for up to 8 years. Subsequently, the mandatory lease period for New Stay has been extended from 8 years to 10 years. The rental fees for New Stay are capped at a 5% annual increase.
Private entities such as construction companies establish Real Estate Investment Trusts (REITs) to acquire land and proceed with the New Stay project by receiving funding from the Housing and Urban Guarantee Corporation's (HUG) housing and urban fund.
As the first New Stay units reach the end of their lease obligations this year, the tenants are showing significant interest in whether these New Stay units will transition to general sales and whether priority sales rights will be granted to tenants.
However, under the current private rental housing law, once the 8-10 year leasing obligation of New Stay ends, there is no obligation for conversion of sales to tenants. Therefore, there are no regulations on the timing or pricing of conversion.
According to the decisions made by construction companies and HUG members, New Stay leasing periods can be extended, and they may be transitioned to general sales.
In particular, it seems that the direction of the New Stay businesses will change depending on the will of HUG. Looking at the structure of the REITs, HUG holds about 60-70% of the equity, while the construction companies' equity is only about 10-20%.
Currently living in New Stay, individual A said, "Since this is a rental housing supply project created to enhance housing welfare by the government, priority sales rights should be granted to tenants," adding, "If units transition from rental housing to sales, they should be able to purchase at the initial level from 8-10 years ago when rental housing was sold."
On the other hand, officials from the government and construction industry believe that deciding on the conversion of sales, timing, and price after the New Stay lease period ends is entirely at the discretion of the New Stay operator.
An industry representative stated, "After investing large amounts of money into New Stay and operating a rental business that is not highly profitable for 8-10 years, the time has come to recover funds and gain profits through general sales," while also noting, "Since there is no specification in the legislation regarding preferential sales rights for tenants, how to proceed with the business will be a matter for the REIT members to decide."
The Ministry of Land has stated that it has not yet made any decisions regarding the conversion of sales for New Stay, which is nearing the end of its mandatory rental period.
A spokesperson from the Ministry of Land stated, "There was no guidance on preferential sales rights in the announcements made when moving into New Stay," adding, "For New Stay reaching the end of the rental obligation period, HUG and others will decide whether to extend the leasing period or to convert it to sales."