The government put the regional housing association (jihujtaek) system—long stigmatized as something you would "recommend only to an enemy" due to difficulties securing land and opaque association management—on the operating table. It lowered the standard for securing land ownership to 80% and increased management transparency to speed up normal business sites, while rationalizing dissolution procedures for poorly run sites to minimize property losses for association members.
The Ministry of Land, Infrastructure and Transport on the 20th announced measures to prevent jihujtaek losses and normalize projects. This follows President Lee Jae-myung's directive in Jun. last year, when he said, "Major jihujtaek accidents have occurred, and I understand the problem is serious," calling for institutional reforms.
Jang Woo-cheol, housing policy director at the Ministry of Land, Infrastructure and Transport (MOLIT), said, "If the Oct. 17 measures last year focused on minimizing the establishment of new associations, this time we focused on allowing already launched projects to proceed quickly through deregulation," adding, "The plan also includes improvements that will encourage early exit if problems arise in subsequent stages, even for projects that have already begun."
A jihujtaek is a system in which no-home households and single-home owners (85㎡ or less) residing in a certain area voluntarily form an association, purchase land directly, build dwellings, and receive supply without subscription competition. As of the end of 2024, there are 618 jihujtaek business sites nationwide.
Unlike reconstruction or redevelopment projects promoted by landowners, jihujtaek projects often begin without securing land ownership, leading to prolonged land purchases and frequent delays or suspensions. Protracted timelines drive up land acquisition prices and financing costs, resulting in additional shares that far exceed the expected contributions.
Association management is also opaque, so corruption and embezzlement cases are common. Due to a lack of expertise and collusion, there are cases where a builder demands a construction cost increase right before move-in, causing project costs to rise unreasonably.
◇ Easing land ownership securing to 80%
To speed up jihujtaek projects, MOLIT will relax the land ownership securing standard for project plan approval from the current 95% to 80%, the same as general dwelling construction projects. This addresses slow progress due to high land securing requirements for project authorization. After receiving project authorization, the right to demand sale can be exercised, which can accelerate progress. In particular, for planned project sites owned by an agent or a builder, the association can demand a sale regardless of holding period, making "squatting" difficult.
MOLIT will also prevent displacement by allowing original residents who own and reside in a single dwelling of 85㎡ or more in the project area to join the association even if they do not meet member eligibility requirements. Currently, to join a jihujtaek, one must be no-home or a single-home owner of 85㎡ or less and have lived in the area for more than six months. However, as of the date of the recruitment report application, requirements of owning a dwelling for at least two years and residing for at least one year are imposed.
MOLIT will also lower the threshold for joining by changing the timing for determining member eligibility from the current association establishment authorization application date to the association joining application date when filling vacancies. A MOLIT official said, "This institutional reform is expected to move up project schedules by about one to two years."
◇ Timely dissolution of insolvent associations
To address chronic issues of insufficient expertise and transparency, MOLIT will introduce a registration system for association agents. Only firms that meet strict criteria—500 million won in capital and five full-time professionals such as attorneys and accountants—will be allowed to handle association work. Through this, MOLIT also plans to prevent unfair contracts with builders. Verification by professional institutions such as the Korea Real Estate Board (REB) will be mandated to prevent excessive construction cost hikes by builders. In addition, competitive bidding for builders will be mandatory, and associations will be allowed to implement projects independently rather than co-implementing with builders, encouraging fair contracts between associations and builders.
Information disclosure will also be expanded to fix the problem of operating in the dark. Associations must provide, every half year, mandatory information detailing project progress, including land securing rates and contribution payment status. In addition, when disclosing the member roster, phone numbers must be disclosed in addition to resident registration numbers and addresses, and records and supporting documents for fund withdrawals and use must be disclosed to members. The appointment of association executives who are special related parties, such as employees of developers or agents, will also be restricted.
To strengthen members' decision-making power, MOLIT will introduce online general meetings and electronic voting, and strictly limit recognized proxies to spouses and lineal ascendants and descendants. The withdrawal period allowing association exit and refunds will also be extended from 30 days to 60 days.
The government will also encourage timely dissolution of insolvent associations. MOLIT will establish grounds for re-resolution on project termination or mid-course dissolution of long-stagnant associations so that weak projects can be closed in a timely manner. In particular, MOLIT will strengthen local governments' management and oversight authority to allow cancellation of authorization for associations that are effectively not operating or have arbitrarily lost land rights. Associations that have completed projects will be required to hold a dissolution general meeting within one year, and if they fail to dissolve without justifiable reason, local governments will be given grounds to dissolve them ex officio.
Kim Ei-tak, 1st vice minister of MOLIT, said, "If the strengthened initial entry criteria and these measures work, we expect losses from regional housing associations to be significantly reduced."