The Seoul Metropolitan Government has announced plans to continue to provide monetary support for lease deposits by granting interest-free loans for 500 units of long-term stable housing. After the initial 500, the city will expand its support to cover a total of 1,500 housing units in 2016. Under the new plan, which aims to reduce high residential costs for citizens without their own home, lessees will be provided 30% of their housing deposit by the government.
Thirty percent of the 500 units will be reserved for applicants from certain demographics— 20% of the 500 units will be reserved for newlyweds to encourage childbirth, and 10% will be reserved for households of three or more minors (including those still in utero at the time of application).
For eligible households, monetary support will be provided in the form of an interest-free loan equivalent to 30% of the leasing deposit up to KRW 45 million, for up to six years. Since its establishment in 2012, the Seoul Metropolitan Government’s “Long-term Stable Housing Program” has supported 5,100 houses (as of December 16, 2015). The program is run in cooperation with house owners, lessees, and the SH Corporation.
The Seoul Metropolitan Government hopes that the first 500 units of support will help lessees more easily find housing in the spring, during the peak moving season. The timing and scale of the next 500 units of support will be announced by the Seoul Metropolitan Government once market trends and rental price fluctuations have been fully analyzed.
|Lease on a deposit basis||Monthly rent with a security deposit|
|Eligible houses||Housing area||Less than 60 square meters
(households with four or more members: less than 85 square meters)
|Security deposit||Deposit of less than
KRW 220 million
(Households with four or more members: less than KRW 330 million)
|① The sum of base deposit and deposit converted from lease on deposit basis
of less than KRW 220 million,
② Monthly rent of less than KRW 500,000
(Sum of deposits for a household with four or more members: less than KRW 330 million)
|Support amount||30% of deposit
(up to KRW 45 million)
|30% of base deposit
(up to KRW 45 million)
|※ 50% of deposit will be provided if deposit is less than KRW 60 million|
※ Deposit converted from lease on a deposit basis = Monthly rent x 12/rate of conversion into monthly rent (6%) [Article 7-2, Housing Leasing Protection Act]
Eligible houses include both those leased under the “lease on a deposit basis”, and a “monthly rent with a security deposit”. The deposit for lease (“security money for lease on a deposit basis” or “the sum of the base deposit for lease and deposit converted from lease on a deposit basis”) shall not exceed KRW 220 million for a household of three or less, and KRW 330 million for a household of four or more. In the case of a house leased under a monthly rent with a security deposit, the monthly rent may be up to KRW 500,000. If the deposit for the lease is less than KRW 60 million, support will be provided for the amount equivalent to 50% of the lease deposit. The area of eligible housing shall be less than 60 square meters for a household with three or less, and 85 square meters for a family of four or more.
Eligible households are those without their own home residing in Seoul at the time of notice. The average monthly income of the household must be less than 70% of the national average monthly income. The real estate owned by the applicant must be valued at less than KRW 126 million, and any automobiles must be valued at less than a total of KRW 24.89 million. As of 2014, 70% of the monthly average income of a four-member household of urban workers is KRW 3.66 million.
|Number of Household Members||Three or less||Four||Five or more|
|70% of the national average monthly income (as of 2014)||KRW 3,314,220||KRW 3,657,250||KRW 3,892,010|
Support will be provided for up to six years with the contract being renewed every two years, and the Seoul Metropolitan Government will support 30% of the rise of deposit for lease (rise of up to 10%) at the time of contract renewal.
A notice was posted on the website of the SH Corporation (www.i-sh.co.kr) on December 23 regarding the first 500 units of support, and applications were received from January 4 to 6, 2016. On January 13, the first round of applicants will be selected for document screening, and on February 25, final applicants will be announced. Those who have been selected must sign loan contracts by May 31.