Oh Se-hoon, the Seoul mayor, on the 1st announced the "plan to revitalize registered private rental dwellings" and criticized the government's philosophy on housing supply as fundamentally wrong. He said that to increase supply in the non-apartment institutional sector—such as officetels and one-room units, where young people and one- to two-person households mainly live—authorities should incentivize and encourage the rental operators who supply them, but instead they are treated like criminals and regulated.
Oh said, "The government demonizes and scolds housing suppliers," adding, "Foreign operators also think they will suffer losses if they invest in the Korean market and are moving their money to other countries."
The following is a Q&A with Oh
- What is the reason for announcing the plan to revitalize private rental dwellings?
"Because Seoul judged the current situation to be urgent. There is almost no new supply. There are even media reports of a supply cliff. During the lost decade under the previous Seoul mayor, volumes decreased, and the follow-up procedures did not take place, which is the cause. More serious is that one- to two-person households are surging. There is a dire shortage of homes for them to live in."
- What is the reason supply is not working properly?
"The government must clearly distinguish, conceptually, between people who own multiple homes and rent them out and those who run rental businesses professionally. (The reason is that it is not doing so.) The latter should receive various incentives from the government. Only then will they build rental dwellings. But they are being scolded so they cannot build. Recently, foreign capital has also been trying to enter the domestic rental market, but even operators who are clutching their money and eyeing business opportunities increasingly perceive under the current government that this is effectively telling them not to do business here. Thinking they will suffer losses doing business here, they hesitate to invest and look for other destination countries."
- What is the root cause of this situation?
"It is a difference in philosophy toward rental operators. The perspective on rental operators is different. The Seoul city government's perspective is the desirable one. Can supply of dwellings happen if you demonize operators while hoping for supply? You must discard that view first. Because the Democratic Party government demonizes them, contradictions arise. For operators who produce a product and supply it to the market, what do they need, how can we help, we will resolve these regulations—approaching it this way will get them excited and bring them into the business. But if you demonize them for taking profits, they will invest that capital elsewhere."
- From when will Seoul's housing fund be used?
"After passing the city council, we expect to prepare detailed guidelines by the end of the year and begin operations next year."