The functions of the Korea Land & Housing Corporation (LH) will be split in two.
Under a plan for reforming the functions of state-run institutions, announced jointly by related ministries on the 3rd, the government will assign land development and housing construction to a new entity tentatively named the Housing & Urban Development Corporation, while housing welfare and asset holdings will go to another tentatively named the Housing & Urban Asset Corporation. The government aims to overhaul both the organizational and financial structures to speed up housing supply and stabilize the operation of housing welfare programs.
Officials pointed to inefficiencies that arose from having a single institution carry out both development and housing welfare work. Development work emphasizes speed and financial performance, while housing welfare work emphasizes public interest. With the two functions mixed within one organization, housing supply slowed and the burden of operating rental housing grew, according to the plan. That led to the conclusion that separating the functions was needed to redefine the overlapping roles and improve financial conditions.
Attention is focused on how the two will be funded. The government plans to design the operating structure so that development profits earned by the development corporation can flow into housing welfare funding. Under the proposal, part of the development corporation's profits would be set aside in a separate account within the Housing and Urban Fund, and the fund would then make contributions to the asset corporation. The result is a circular structure in which earnings from the development side support the housing welfare side.
How the functions will be divided between the two organizations has not yet been disclosed. The Ministry of Land, Infrastructure and Transport is expected to announce a more detailed breakdown of the functions in an LH reform plan.
