The monthly rent for "rooms" mainly inhabited by the most financially struggling groups in Seoul has increased by more than 13% over the past five years. During the same period, the monthly rent increase for row houses was less than 2%. Regarding this situation, residents of these rooms are saying, "The government provides housing support up to 340,000 won per month, but there's hardly any effect on improving low-income housing conditions, and only the rent for these rooms rises, ultimately benefiting the landlords."
◇Seoul room rent rises 13.2% over 5 years... 7.7 times the row house rent increase
According to Seoul city on the 23rd, there are 3,253 rooms in five room villages, including Donui-dong, Changsin-dong, Namdaemun, Seoul Station, and Yeongdeungpo. Ninety-seven percent of room residents pay rent to landlords. The average monthly rent is 266,000 won. Changsin-dong is the cheapest at 252,000 won, while Namdaemun is the most expensive at 270,000 won.
The average monthly rent for the five room villages was 235,000 won in 2019. In 2020, it rose by 3.8% (9,000 won) to 244,000 won compared to the previous year. It continued to rise every year, reaching an average of 266,000 won last year, increasing by 4.3% (11,000 won) from the previous year. The five-year increase rate is 13.2%.
However, the monthly rent for regular dwellings, where people with better economic conditions reside, shows little change. According to the Korea Real Estate Board, the highest annual increase in row house rent in Seoul between 2019 and 2023 was 1.19% in 2021. It even decreased by 0.33% last year. The five-year rent increase rate is 1.7%.
◇"As housing benefits rise, so does room rent... concerns of misuse"
The welfare system of housing benefits is being identified as a factor in the significant yearly increases in room rent. Since 2000, housing benefits have been a government initiative to support housing costs for low-income individuals. Most room residents pay their rent not with their own money, but with government-provided housing benefits. The Ministry of Land, Infrastructure and Transport annually sets and announces the upper limit of these housing benefits as the "standard rent." If the standard rent is 300,000 won, whether the room rent is 280,000 won or 290,000 won, the government covers the full rent.
"Housing benefits are unfairly raising the rent," is a sentiment heard from residents in room villages. Yoon Yong-joo, the co-chair of the Dongja-dong Sarangbang, a resident activity group in front of Seoul Station, noted, "Landlords increase rent in line with the rise in housing benefits." This means room rent is being determined not at a reasonable market level but is rising according to increases in housing benefits.
In fact, the standard housing benefit for single-person households in Seoul was 233,000 won in 2019, which was similar to the average room rent of 235,000 won that year. Since then, room rent and housing benefits have followed a similar trend.
Regarding this, the Korea Research Institute for Human Settlements, in a 2022 research report, raised concerns, saying, "There are questions about whether property owners are exploiting housing benefits to extract the maximum rent from room residents."
◇Experts: "Public sector should improve room villages and lease them cheaply"
Seoul city has been running the "Affordable Room" project since 2013. The project involves renting over 100 existing rooms from a room consultation center, repairing the interiors, and then re-letting them to residents at a lower rent. The purpose is to improve housing conditions and curb room rent increases.
The Affordable Room project ended in April this year. A Seoul city official said, "Rent hikes were a serious issue in the past, but with the revamp of the basic livelihood guarantee system in 2015, housing benefits have significantly increased. Recently, the project has been deemed less effective as rent can now be resolved with housing benefits."
Last year, the standard rent for housing benefits (330,000 won) was 64,000 won higher than the average room rent (266,000 won). Room rents have reportedly surged since then. Yoon Yong-joo noted, "After the Affordable Room project ended, landlords raised rent to as high as 330,000 won," adding, "Increasing housing benefits is essentially aiding landlords who own rooms." With 3,253 rooms in Seoul, if housing benefits increase by 10,000 won and rent rises by 10,000 won, the total rental income collected by room landlords increases by 32.53 million won monthly, or 390 million won annually.
Regarding this, Hong Jeong-hoon, a researcher at the Korea Urban Research Institute, noted, "The government has yet to find an appropriate mechanism to prevent side effects," suggesting that "expanding the public role, as seen in the Yeongdeungpo room village development project, could be a viable solution." The Korea Land and Housing Corporation (LH), Yeongdeungpo District, and Seoul Housing & Communities Corporation (SH) are currently pursuing redevelopment of the Yeongdeungpo room village into a public housing complex, allowing existing residents to move into newly acquired public rental housing.