It has been argued that the Regional Housing Association (RHA) should relax the requirements for securing land ownership when obtaining business plan approval in order to normalize the purpose of 'helping low-income residents without homes acquire their own homes.' The required ratio of land ownership for the approval of RHA business plans is 95%. This differs from the required land ownership ratio (80%) at the establishment of the association, leading to ongoing concerns that it may encourage 'land hoarding.'
If the requirements for securing land ownership applicable to the RHA are relaxed, it is projected that there will be an additional supply effect of approximately 94,000 dwellings.
On the afternoon of the 27th, a seminar on 'Policy Improvement for the Activation of Housing Supply through RHA' was held in the first subcommittee room of the National Assembly in Yeouido, Seoul. This event, hosted by Democratic Party of Korea Representative Jeon Yong-gi, was attended by Park Moon-soo, president of the Korean Real Estate Industry Association, Kim Ok-jin, chairperson of the National Association of Regional Housing Associations, Kim Hye-gyeom, lawyer at Young Law Firm, and Kim Kwang-soo, policy director of the Korean Real Estate Industry Association.
Representative Jeon said, 'If we are not going to force just one option of expensive housing led by the state or large construction companies, we must recognize that RHA is a valuable option for citizens to create their own homes,' adding, 'We must lower risks and enhance feasibility to create a system in which the public can choose with peace of mind.'
The RHA system, which was introduced in 1980, allows local residents to autonomously form associations, directly purchase land, and supply homes without competition for subscriptions. Households without homes or those with only one dwelling (under 85 square meters) can save project costs by forming associations and implementing projects, thus allowing them to obtain their own homes at lower prices compared to general sales. According to the Korea Research Institute for Human Settlements (KRIHS), there are currently a total of 618 business sites across the country undertaking the RHA project, with approximately 360,000 total households and around 260,000 members.
However, many business sites are unable to move past the business plan approval stage due to difficulties starting from land purchases. More than half of the RHA projects currently in progress remain at the recruitment notification stage. As issues within the RHA system persist, President Lee Jae-myung noted in June, 'There has been a serious issue with RHA accidents occurring on a large scale,' and instructed for system improvements.
One of the reasons for the delay in RHA projects is pointed out as the excessively high requirements for securing land ownership. Under the current system, RHA projects must secure 80% ownership of the land area for establishment approval. However, to obtain business plan approval after establishing the association, 95% ownership of the total land area is required. This situation complicates negotiations with landowners, as RHA needs to secure an additional 15% of land ownership after establishment approval.
Kim Hye-gyeom from Young Law Firm said, 'Issues related to delays in securing land at RHA sites occur commonly,' and pointed out, 'There is a significant gap in the land acquisition ratios between the approval for establishing the association and the business plan approval stage.' She added, 'Because of this, negotiations with landowners become difficult, leading to land hoarding phenomena, increasing business costs and delaying the overall project timeline, which burdens the members of the association.'
Looking at the average time required for each stage of RHA projects, it takes about 2.9 years to get business plan approval after establishment approval, which is the longest. The previous stage, from recruitment notification to establishment approval, takes about 1.7 years. It takes 1.1 years from receiving business plan approval to starting construction.
There is an assertion that the ratios of securing land ownership for establishment approval and business plan approval should be matched. Kim Kwang-soo, policy director of the Korean Real Estate Industry Association, stated, 'The existing requirement of securing 95% of land ownership for RHA business plan approval is essentially a high barrier equivalent to unanimous consent,' urging that this ownership requirement should be lowered to the 80% level required for establishment approval.
Some opinions have also emerged regarding the need to introduce a landowner membership system to secure cooperation from landowners. Kim stated, 'Currently, there is no system for allowing landowners to participate as members, which is causing unnecessary conflicts and expenses in the business promotion process,' and emphasized the need for a landowner membership system. Lawyer Kim also explained, 'If we institutionalize the ability to acquire housing supply rights in exchange for providing land for landowners with land areas above a certain threshold, it will facilitate negotiations for land purchases and prevent land hoarding phenomena.'
Proposals have also been made for the registration system of business agents to protect RHA members, along with strengthening regulations against false advertising. The RHA typically entrusts business agents with all tasks related to the overall project, from recruiting and managing members to land acquisition, business planning, and approval procedures until construction is completed. While business agents hold substantial authority, their legal responsibility for project failures is limited. This structural setup can result in damages to members due to excessive project cost calculations or a lack of transparency in operational expenses.
Kim noted, 'It is insufficient to define the requirements for the experience and expertise of business agents,' and emphasized the necessity of establishing a management and supervision system for local governments through the mandatory registration of business agents.
In addition, suggestions have been made to secure the expertise of project chairs and association leaders, to introduce verification systems for resolving conflicts over construction cost increases, and to recruit members after confirming district unit plans in order to resolve issues with RHA projects.
If such system improvements are made, it is expected that the RHA's role in housing supply will be restored. According to simulations conducted by Director Kim, about 230 additional business sites will be able to move to the stage of business plan approval. This would increase the number of dwellings that could be supplied through RHA from the existing 177,000 to 271,000. As a result of system improvements, an effect of supplying approximately 94,000 additional dwellings would occur. Director Kim stated, 'Even simple system improvements can create housing supply effects equivalent to a mid-sized city.'
The government plans to conduct a thorough review to improve the RHA system. Lee Yu-ri, director of the Ministry of Land, Infrastructure and Transport, noted, 'We are considering improvements to the system by dividing the recruitment stage and the project progression stage into two tracks,' adding, 'We will prepare improvement measures soon.'