As it became known that Minister-nominee Kang Shin-cheol of the Ministry of National Defense and his father had received Seoul apartments in the past through a "special supply for displaced residents," the program is drawing renewed attention. The Seoul city government had specially supplied public-sale apartments to people who lost their homes due to urban planning projects, but after the allocation rights were abused as tools for speculation and illegal resales, it abolished the system in 2008 and switched to providing rental housing such as long-term jeonse housing.
The project that included the dwellings owned by Kang and his father as demolition targets posted its compensation plan just two days before the new system's effective date, so it fell under the previous allocation regime.
According to the Ministry of Land, Infrastructure and Transport and the Seoul city government on the 14th, the special supply for displaced residents was introduced to support the resettlement of residents whose homes were demolished due to public utilities such as the construction of roads, parks, and parking lots, and redevelopment. Rather than only paying compensation for buildings and land, it is a system that helps residents secure new housing by specially supplying dwellings built by the public sector.
At the time, whether someone qualified as a displaced resident was reviewed by local governments such as the Seoul city government. Once confirmed as eligible for special supply, applicants could apply for public-sale apartments of national housing size or smaller supplied by the Korea Land & Housing Corporation (LH) and the Seoul Housing and Urban Development Corporation (SH). A portion of the apartment supply in newly developed housing sites was allocated to displaced residents.
However, as special-supply eligibility led to apartment wins and even sizable capital gains, side effects emerged. Some people bought dwellings in areas slated for demolition or moved their address to become eligible, and special-supply eligibility was even traded illegally.
In its "residence-centered housing measures" released in December 2007, the Seoul city government said special allocation rights had been abused as tools for speculation and illegal resales, disrupting the housing market. It explained that the system also delayed urban planning projects, citing cases where people refused to negotiate compensation to be assigned dwellings in the Gangnam area, where price gains were large.
A shortage of sites to supply was another reason for changing the system. Kim Yong-hwan, head of Seoul's housing welfare policy team, said, "In the past, we had ample housing sites and could supply sale housing to displaced residents, but as supply conditions worsened, we shifted to providing long-term jeonse housing."
In April 2008, the Seoul city government revised the rules on special supply for displaced residents. Accordingly, for projects whose compensation plans were posted on or after the 18th of the same month, it granted eligibility to move into rental housing such as long-term jeonse housing instead of special supply of public-sale apartments. However, projects whose compensation plans were posted before the base date were governed by the previous rules.
The "Yeongdeungpo replacement correctional facility construction project," which led to the demolition of the dwellings owned by Kang and his father in Cheonwang-dong, Guro-gu, had its implementation plan approval published on April 10, 2008, and its compensation plan posted on the 16th of the same month. That was two days before the new standard took effect.
Kang and his father were confirmed as special-supply recipients for displaced residents on Oct. 17 of that year. They then each applied for apartments in the Umyeon District 2, with Kang said to have acquired Seocho Nature Hill Complex 3 and his father Complex 2.
Kang's side said the nominee and his family were actual compensation subjects as owners of a demolished dwelling and that the special supply proceeded according to normal procedures. They also argued there was no false address registration or speculative intent.
According to SH, from 2008 to 2013, the Seoul city government supplied about 10,000 sale dwellings to displaced residents. This is seen as because the supply from projects whose compensation plans were posted before the system overhaul—and thus governed by the previous rules—continued afterward.