In the conversion-to-sale process for the corporate rental dwellings known as "New Stay," a plan is being pursued to prioritize supplying even the units not purchased by existing tenants to people without homes. When New Stay reaches conversion after the mandatory rental period ends, in addition to granting the right of first refusal to tenants without homes, the idea is to first give members of households without homes a chance to buy dwellings that move to general sale because the right of first refusal was not exercised.
New Stay tenants who currently own dwellings will also be able to receive the right of first refusal if they dispose of their existing dwellings by the time the conversion-to-sale notice is issued and thereby meet the requirement of being members of households without homes. While dwelling ownership was not screened at the time of move-in, this is seen as prioritizing housing stability for genuine end-users without homes at the conversion stage.
According to the Ministry of Land, Infrastructure and Transport and the dwellings industry on the 10th, the Korea Housing & Urban Guarantee Corporation (HUG) recently conveyed to New Stay business sites whose mandatory rental periods expire this year the direction for conversion to sale that includes these points. HUG plans to hold a "New Stay conversion-to-sale joint meeting" on the 12th to discuss detailed procedures and application plans with related operators.
New Stay is a corporate rental dwelling program under which the housing & urban fund and private builders invest capital to establish a real estate investment company, or a REIT, and allow residents to live for up to eight years at rents set at 90% of surrounding market rates. At introduction, it billed itself as a rental dwelling that "the middle class can also move into," without screening income levels or dwelling ownership.
However, at the conversion-to-sale stage after the mandatory rental period ends, the standards are being revised to more strongly reflect the public interest of housing stability for people without homes. Since these are private rental dwellings supported by public funds, the principle is that, after conversion to sale, dwellings should first go to genuine end-users without homes.
Previously, HUG and New Stay operators agreed in Dec. last year to pursue conversion to sale after extending the rental period by two years for "e-Pyeonhansesang Terrace Wirye" in Sujeong District, Seongnam, Gyeonggi, the first New Stay business site where the mandatory rental period ended. At that time, the Ministry of Land, Infrastructure and Transport (MOLIT) and HUG presented, in broad terms, a direction to grant the right of first refusal to tenants without homes.
However, after a suggestion emerged at a dwellings industry town hall meeting held last month, chaired by Minister Kim Yun-duk of the Ministry of Land, Infrastructure and Transport, that "there is no clear guideline for New Stay conversion to sale," HUG is said to have made it more concrete and conveyed it to each business site.
The core of this plan is how to handle units for which the right of first refusal is not exercised. HUG is said to have set a policy to prioritize selling to members of households without homes even those dwellings that move to third-party sales because existing tenants did not apply to exercise the right of first refusal. Until now, when units abandoned for conversion to sale moved to general sale, there had been criticism that the supply criteria were unclear.
A dwellings industry official said, "Each business site will issue a notice for right-of-first-refusal applications and set an application deadline, and if the no-home requirement is met by this deadline, the right of first refusal can be obtained," adding, "For volumes that move to general sale because no right-of-first-refusal applications come in, the approach will be to prioritize selling to members of households without homes." The official added, "As with general subscriptions, if the initial target group does not exhaust the volume, it may proceed by expanding the target group afterward."
Measures will also be prepared to ensure housing stability for tenants who do not apply for conversion to sale. HUG is said to have proposed a plan to guarantee rental occupancy for two years even after the right-of-first-refusal application deadline ends. If, in addition, the tenant exercises the right to request renewal of the lease, the occupancy period can be extended by another two years. In this case, tenants who do not apply for conversion to sale are expected to be able to remain for up to four additional years.
This policy is also expected to affect the conversion-to-sale standards for New Stay and public-support private rental complexes whose mandatory rental periods are nearing expiration. By 2030, New Stay and public-support private rental complexes with mandatory rental periods ending will total 49 locations nationwide, comprising 39,430 households.