Among nationwide New Stay complexes, "e-Pyeonhansesang Terrace Wirye," the first whose mandatory rental period has ended, will begin the sale process in Nov. The rental period was extended after Nov. last year because sales criteria were not set when the mandatory rental period expired, but the so-called conversion-to-sale method has been decided after about eight months. Priority purchase rights will be given to current tenants without homes, and the appraisal result by appraisal firms selected by the REIT and by the tenant side will be reflected in the price. However, as home prices in Wirye New Town have risen sharply recently, conflicts over the sale price are likely to continue.
On the 22nd, according to the Korea Housing & Urban Guarantee Corporation (HUG) and the real estate industry, Wirye New Stay Corporate Rental Entrusted Management Real Estate Investment Company (Wirye REIT), the rental business operator of e-Pyeonhansesang Terrace Wirye in Changok-dong, Sujeong-gu, Seongnam, Gyeonggi, held a shareholders' meeting on the 20th and approved the schedule and criteria for selling the dwellings.
A HUG official said, "We held a board meeting on the 14th and a shareholders' meeting on the 20th to proceed without a hitch with the asset sale and REIT liquidation procedures following the end of the mandatory rental period."
e-Pyeonhansesang Terrace Wirye is a terrace-house complex of 360 households that opened in Nov. 2017. All units consist of an exclusive area of 84㎡. Among nationwide New Stay complexes, it is the business site where the mandatory rental period ended first.
New Stay is a corporate rental housing system introduced in 2015 with the aim of supplying rental housing at the level of private brand apartments to the middle class. The housing & urban fund and private construction companies invest to establish a REIT and supply dwellings. In return for limiting the annual rent increase rate to within 5% and observing an eight-year mandatory rental period, operators could autonomously decide the sale target and price after the period ended. Unlike public rentals, there are no separate legal standards for tenants' priority purchase or sale price.
Wirye REIT plans to start the sale process in Nov. Among current residents, members of tenant households without homes will be given the first opportunity to buy the dwellings. Tenants who forgo purchase will also be allowed to continue living for a set period.
The sale price will be set based on appraisal results. An appraisal firm selected by Wirye REIT will assess the price, and if tenants wish, the appraisal result from a firm recommended by the tenant side will also be reflected. The specific method for reflecting the two appraisal amounts will be presented during the tenant guidance process.
A HUG official said, "Only when we begin a full appraisal can we know the specific price," adding, "We will supplement the detailed sale criteria by gathering opinions from related agencies and tenants during the process."
This complex's mandatory rental period ended in Nov. last year, but the rental period was extended by two years because criteria for the sale target and price calculation were not established. When the system was introduced, the government, to encourage participation by corporations, left the sale method and price after the end of the mandatory rental period to operators' discretion, which caused confusion. There was also criticism that a REIT funded by the housing & urban fund would find it difficult to set sale conditions on its own without separate standards.
Although sale criteria have been drawn up, more friction is expected in the price-setting process. Because appraisals are based on market value at the time of evaluation, the recent rise in Wirye New Town home prices is likely to be reflected. Nearby major apartments with an exclusive 84㎡ have recently changed hands in the 1.6–1.9 billion won range. Even if the appraised value comes in below surrounding apartment market prices, there is a possibility that the sale price will exceed 1 billion won. If the loan limit falls short of the sale price, tenants granted priority purchase rights will also need to secure substantial cash.
The sale method for e-Pyeonhansesang Terrace Wirye is expected to set a precedent for other New Stay complexes. According to HUG, by 2030 the mandatory rental period will end for 49 New Stay business sites nationwide, totaling 39,430 households. Dongtan Haengbok Maeul Prugio, Dongtan Lake Xi The Terrace, and Dongtan 2 Lotte Castle are also pursuing sales after their mandatory rental periods end. In complexes across the Seoul metropolitan area where home prices have risen significantly, conflicts over priority purchase targets and sale prices are likely to recur.