As the government moved to extend the lease period for New Stay (publicly supported private rental dwellings) by two more years from eight years, New Stay tenants nationwide began forming a federation to respond. The reason New Stay residents are forming the National New Stay Federation is to convey the view that units must be converted to sales immediately after the mandatory period expires. They argue that even if the lease period is extended further, the sale price must be fixed at the point when the mandatory period expires.
According to the real estate industry on the 3rd, residents of about 20 New Stay complexes nationwide that are approaching the end of their lease periods will gather at 11 a.m. on the 9th at the National Assembly Members' Office Building in Yeouido, Seoul, to launch the "National New Stay Federation."
The government decided to extend by two years the lease period for e-Pyeonhansesang Terrace Wirye, the first among New Stay complexes to complete the mandatory eight-year lease term. According to the construction industry and a government official, Wirye New Stay REITs (real estate investment company), the New Stay operator of e-Pyeonhansesang Terrace Wirye, set a course to extend this complex's lease period by two years and then convert to sales when the eight-year mandatory lease period expires on Nov. 29 this year. The shareholders of Wirye New Stay REITs are Korea Housing & Urban Guarantee Corporation (HUG), DL, and KB Securities.
The prevailing view is that after extending the lease period, the government will proceed with sales targeting people without homes. The reasoning is that prioritizing sales of rental apartments to homeowners when rental apartment supply is already tight, and selling public rental apartments below market prices, would create negative public opinion.
A resident of the e-Pyeonhansesang Terrace Wirye New Stay said, "Apartment prices in the capital region are soaring without limit, and if the New Stay lease period that has ended is extended by two more years before converting to sales, wouldn't the sale price rise that much more?" adding, "To prevent excessive development profits by private operators, the sale price should first be set at the time the mandatory lease period expires by taking the arithmetic average of appraisal amounts from appraisers selected separately by HUG, the construction company, and the tenants."
There are currently a total of 25,411 New Stay complexes nationwide, which conducted recruitment notices in 2015–2017 and are now approaching the expiration of the 8–10 year mandatory lease periods starting this year.
By region, Gyeonggi includes ▲ Dongtan Haengbok Maeul Prugio ▲ e-Pyeonhansesang Terrace Wirye ▲ Gimpo Hangang Yemiseu ▲ Hwaseong Dongtan 2 Lotte Castle ▲ Dongtan Lake Xi The Terrace ▲ Suwon Homaesil ▲ Siheung Janghyeon Richville The Stay ▲ Dongtan Lake Park I'Park ▲ Suwon Gwonseon Kkumegreen ▲ Sindongtan Lotte Castle ▲ SK View Park Phase 3.
Seoul includes ▲ H HOUSE Daerim New Stay ▲ Mullae Lotte Castle, and Incheon includes ▲ Incheon Seochang Kkumegreen ▲ e-Pyeonhansesang Doha Phases 5 and 6. In the provinces: North Chungcheong ▲ North Chungcheong Innovation City Umi Lin, Daegu ▲ Daegu Geumho Seohui Star Hill Stay, Gwangju ▲ Hyocheon District 1 Jungheung S-Class Liberty.
New Stay is a publicly supported private rental dwelling introduced by the Park Geun-hye administration in 2015. The housing & urban fund and private construction companies contribute capital to establish a REIT and operate it jointly. Rents were set at about 10% of surrounding market levels with leases of at least eight years, and there were no initial rent controls or restrictions on tenant eligibility.
The Special Act on Private Rental Housing, the legal basis for New Stay, has no provisions on liquidation after the mandatory lease period ends. The structure allows the REIT operator to decide to extend the New Stay lease or choose conversion to sales.
A resident of a New Stay complex in the capital region said, "Among a total of 20 New Stay complexes, the tenant association chairs of 10 complexes, including e-Pyeonhansesang Terrace Wirye and e-Pyeonhansesang Doha Phases 5 and 6, plan to attend the launch of the National New Stay Federation," adding, "Complexes that do not yet have a tenant chair or have a long time left on their lease periods will be asked to join after the launch of the National New Stay Federation."