The government is moving to boost "cooperative-model social dwellings," a type of public-support private rental dwellings. It is reviewing ways to expand the cooperative-model social dwellings named "We Stay," piloted in 2016, to supply "low-cost, high-quality rental dwellings" that even the middle class can move into.
Unlike "New Stay," a public-support private rental dwellings program where construction companies lease units, the cooperative-model social dwellings are led by a social cooperative whose members are residents. A real estate investment trust (REIT) joined by the social cooperative and public institutions such as the Korea Housing & Urban Guarantee Corporation (HUG) raises project financing and commissions a construction company to build private rental dwellings.
According to the Ministry of Land, Infrastructure and Transport (MOLIT) and the real estate industry on the 8th, MOLIT and HUG visited "We Stay Byeollae" in Byeollae-dong, Namyangju, Gyeonggi Province, the previous day to explore ways to invigorate cooperative-model social dwellings.
We Stay Byeollae is a cooperative-model public-support private rental dwellings complex. It was built through a cooperative New Stay public offering project launched by the Ministry of Land, Infrastructure and Transport (MOLIT) in 2016 to address middle-class housing issues. The complex consists of seven buildings with 491 households, from two basement levels to as high as 22 floors above ground, and residents moved in in 2020. With a deposit in the 100 million won range, residents can live there for a monthly rent in the 200,000–400,000 won range.
Unlike New Stay, where a construction company builds and leases apartments, We Stay has a social cooperative take on the roles of developer and operator like a construction company. The members of the social cooperative are residents. Through the cooperative, tenants indirectly own the apartments. We Stay offers rents 20%–30% below market rates and allows for stable residence for eight years.
In New Stay, when rentals convert to sales after the lease term ends, the construction company keeps the capital gains, but in We Stay they go to the social cooperative. However, because a social cooperative cannot pay dividends to its members, even if units are sold, individual resident-members cannot pocket the capital gains. Since residents are cooperative members, they have significant decision-making power when rentals convert to sales or leases are extended. Education and care are also provided with the cooperative at the center. Currently, only two cooperative-model social dwellings exist in Korea: We Stay Byeollae and We Stay Jichuk.
An official at the Ministry of Land, Infrastructure and Transport (MOLIT) said, "In a typical cooperative, when revenue is generated, money must be distributed to members, but in a social cooperative, while dividends cannot be paid, members can live with peace of mind by sharing the dwellings complex." The official added, "Europe has many such models, but in Korea, (in the true sense of European-style social dwellings) it is in the early stages and remains small."
For cooperative-model social dwellings to gain real traction, discussions appear necessary on stabilizing the operation of social cooperatives, refining development structures including policy finance guarantees, and extending lease terms.
MOLIT is seeking to promote cooperative-model social dwellings because the "public nature" of dwellings has been strengthened under the Lee Jae-myung administration. When the Lee Jae-myung administration launched last year, it signaled plans not only to increase public rental dwellings for vulnerable groups but also to expand public dwellings that can cover the middle class. Public dwellings refer to dwellings with both private and public participation, such as private-participation public housing construction projects and public-support private rental dwellings. The government also set a goal of raising the share of long-term public rental dwellings from the current 8% to 10% by 2030.
MOLIT is reportedly reviewing a variety of public dwelling types, as there is criticism that most public rental dwellings—such as lease-to-own rentals and jeonse rentals—do not guarantee genuine residential stability.