Pay just 25% of the presale price to move in... LH’s accumulated equity housing to debut in Goyang Changneung in December

[Financial News] Starting next month, it will be possible to move into a public-sale apartment offered by Korea Land and Housing Corporation (LH) after paying just one-quarter of the presale price.
According to the Ministry of Land, Infrastructure and Transport (MOLIT) on the 4th, the ministry has released detailed implementation measures fleshing out its plan to introduce affordable public housing for sale, announced on August 13 as part of its “Plan to Accelerate Urban Housing Supply.” The measures are intended to help young people and other prospective homeowners with genuine housing needs who have limited assets now but expect their incomes—and their ability to buy a home—to grow. Applicants for either of the two types must have total assets of no more than 362 million won (with the limit raised to 431 million won if they have two children) and a monthly household income of no more than 7.53 million won for a three-person household (or 15.07 million won for dual-income households).
The upfront burden will be significantly reduced. Based on the current average presale price of public housing in the Seoul metropolitan area—510 million won for a 55-square-meter unit—the first stake in an accumulated equity home would cost 128 million won. If buyers take out a loan, whose introduction is currently under consideration, at a loan-to-value (LTV) ratio of up to 40%, that amount would fall to 77 million won. Under Profit-Sharing Type II, the required initial funds, excluding a loan, would be 153 million won, or 30% of the presale price.
Buyers of accumulated equity homes pay 10% when signing the contract and 15% when they move in, securing an initial 25% stake. They then purchase the remaining stake in five installments of 15% every four years. The price of each additional stake is calculated by applying the share being acquired to the initial presale price plus interest accrued over the relevant period. Buyers must purchase a stake at each installment, but can defer the payment for up to one year if they are struggling financially. If they still cannot buy during the grace period, the project operator will buy back the stake or it will be resold. Buyers pay rent to the project operator on the portion they have yet to purchase. After the relevant laws are amended, the benchmark rent is to be set at 90% of prevailing nearby jeonse rates; until then, the existing 80% benchmark will apply under a special clause in the contract. The resale restriction lasts 10 years, during which only public-sector buybacks are allowed, and buyers must live in the home for five years. Seventy percent of the units will be allocated through special supply and 30% through general supply.
According to an example provided by MOLIT, a buyer purchasing a 510 million won home through the accumulated equity scheme in a complex where nearby jeonse rates are 400 million won would pay 128 million won upfront, plus monthly rent of 790,000 won on the remaining stake (if the entire amount were converted to monthly rent). A typical tenant renting in the same complex with a deposit of 130 million won would pay around 1.24 million won a month in rent.
The accumulated equity scheme was first proposed in the August 4, 2020 real estate measures, and a legal basis was established the following year through an amendment to the Special Act on Public Housing. However, no homes have actually been supplied under the scheme in nearly six years. The first project will be offered by Gyeonggi Housing & Urban Development Corporation (GH). In Block A17 of Gwanggyo New Town in Suwon, GH will offer 240 units of 59 square meters under the accumulated equity scheme and accept applications for special supply on the 9th. The presale prices for the 59-square-meter units range from 650.1 million to 685.9 million won. LH plans to expand supply, starting with Goyang Changneung, and will include affordable public housing complexes in its 2027 presale plan, which it will announce later this year.
Kim Yi-tak, MOLIT’s First Vice Minister, said, “I expect affordable public housing for sale to provide effective support for people who have wanted to buy a home but have found presale prices burdensome,” adding, “MOLIT will continue to actively expand affordable housing options to promote housing stability for people with genuine housing needs.”
[email protected] Jeong Gyeong-su Reporter