LH to Be Reorganized into Two Institutions, Separating Development and Welfare

[Financial News] Korea Land and Housing Corporation (LH), which has handled land development and rental-housing operations under one roof, will be reorganized into two institutions. The tentatively named Housing and Urban Development Corporation will take charge of housing supply, while the tentatively named Housing and Urban Assets Corporation will oversee housing welfare, including rental housing. Even after the institutions are separated, the mechanism for channeling profits from development projects into housing welfare will remain in place.
According to the government on the 3rd, the 11th Public Institution Management Committee deliberated and approved the “Plan for Public Institution Functional Reform.” The core of the reorganization is to separate the development and welfare functions currently combined within LH. The Housing and Urban Development Corporation will handle land development and housing construction. The Housing and Urban Assets Corporation will be responsible for housing welfare, including rental housing, as well as land reserves.
The financial link between the two institutions will be maintained. Part of the profits earned by the development corporation will be placed in a separate account within the Housing and Urban Fund, which will then contribute the funds to the assets corporation. The aim is to separate development and welfare organizationally while preserving the principle that development profits are used to fund housing welfare.
The government described the reorganization as “a measure to redefine LH’s overlapping functions and improve its financial condition.” Its plan is to clarify the role and responsibilities of the institution in charge of housing supply, thereby accelerating development while also securing the stability of housing welfare programs.
The organizational split is an extension of discussions on LH reform that began last year. When the Ministry of Land, Infrastructure and Transport (MOLIT) launched the LH Reform Committee in August last year, it identified as key issues the restructuring of business methods by sector, including land development and housing welfare; the redefinition of LH’s functions and role; and the improvement of its financial soundness.
LH’s development function has instead been strengthened under the government’s housing supply policy. Under the housing supply expansion plan announced on September 7 last year, LH was instructed to directly implement housing projects rather than sell public housing sites to private companies. In January, the government also introduced follow-up measures to bring forward the supply of 3,000 public housing units in the Seoul metropolitan area using this approach. The latest functional separation is interpreted as an organizational reform designed to concentrate LH’s expanded supply role in a development-specialized institution.
However, the announcement did not include details on how the institutions would be separated, how assets and liabilities would be allocated, or how personnel would be reorganized. MOLIT plans to announce a specific functional restructuring plan through a separate “LH Reform Plan.”

[email protected] Ahn Seung-hyun Reporter