The government set 284 billion won as the subsidy budget to be injected into Korea Land & Housing Corporation (LH)'s policy projects this year. That is up 22% from last year's payout. Subsidies paid or budgeted for LH over the five years since 2022 amount to about 1.1 trillion won. Analysts say government finances needed for management and repairs are growing as the supply of public rental dwellings increases and existing dwellings age.
According to LH on the 10th, subsidies the government has paid or allocated in the budget to LH from 2022 through this year total about 1.1 trillion won. By year, the payout fell from 200.4 billion won in 2022 to 188.6 billion won in 2023, then began rising again in 2024.
The 2024 payout was 192.3 billion won, and last year's was 232.1 billion won. This year's budgeted subsidies are 284 billion won, up by more than 50 billion won from last year. Government subsidies supporting LH have increased for three consecutive years since 2024.
LH cited the expansion of jeonse and purchase-type rentals and rising management costs for rental dwellings as reasons for the increase in subsidies. According to the LH land housing research institute, as of the end of last year LH operated 1,414,000 public rental dwellings.
An LH official said, "There are many projects into which government subsidies are injected, so the payout can vary each year," adding, "Recently, jeonse rentals and purchase-type rental projects have expanded, and the more rental dwellings increase, the more the management expense inevitably rises."
Repair costs for public rental dwellings are also increasing. According to LH internal data, repair costs for purchase-type rental dwellings rose 37.5% in four years, from 129.2 billion won in 2020 to 177.7 billion won in 2024. In purchase-type rentals, LH buys existing dwellings, renovates them, and leases them to low-income households and others as public rental dwellings.
Yoo Sun-jong, a professor in the real estate department at Konkuk University, said, "LH carries out not only land development but also housing welfare projects, including rental dwellings," adding, "Housing welfare projects find it hard to generate revenue and structurally incur expense burdens."
Some also say aging public rental dwellings should be rebuilt to cut management costs and reinvest part of the sales revenue into other rental dwellings.
Kim Jin-yu, a professor in the urban transportation engineering department at Kyonggi University, said, "Public rental dwellings older than 20 years tend to see repair costs surge," adding, "While building values have fallen, land prices have risen, so it is necessary to create a virtuous cycle by selling a portion of the additional dwellings created through reconstruction and using the proceeds for management and repair costs of other public rental dwellings."
The government also included in the "plan to expand dwelling supply" released last Sept. a measure to rebuild aging public rental dwellings in Seoul into complexes that mix public rentals and public sales. The idea is to ease the management burden of aging rental dwellings while securing both urban dwelling supply and project viability.