Could a mid-sized apartment in Seoul's Gangnam district be sold for around 300 million won? Rep. Jeon Hyun-heui of the Democratic Party of Korea has proposed so-called land-lease housing — in which the public sector retains ownership of the land and buyers purchase only the building — as a way to get there. The idea is to strip land costs out of the presale price and sharply lower the upfront burden on buyers.
"Even a Mid-Sized Gangnam Apartment for 300 Million Won" — Buying the Building Without the Land
Jeon held a news conference at the National Assembly press center on the 21st and said she had introduced an amendment to the Housing and Urban Fund Act that would establish a legal basis for state support of land-lease presale housing, according to political sources.
Under land-lease presale housing, a public institution such as Korea Land & Housing Corporation (LH) owns the land while the buyer owns only the building. Unlike conventional presale housing, the price does not include the cost of the land, lowering the initial outlay for a home. In return, residents pay the public landowner rent on the land.
Jeon argued that expanding the approach could sharply reduce presale prices even in Gangnam, where home prices are highest. "If this system works properly, it will be possible to sell a mid-sized apartment in Gangnam for around 300 million won," she said. "Land-lease housing should be developed not as a policy for one particular area but as a housing policy for the country as a whole."
Lower Presale Prices, but Land Rent Is Separate — Funding and Land Supply Are the Test
The core of the amendment is language specifying that the construction of land-lease presale housing and the site preparation it requires are eligible for support from the Housing and Urban Fund. Under the current structure, public institutions and local governments bear the full cost of both land and construction; the bill aims to draw on national funds to expand their capacity to supply homes.
"It reduces the financial burden on public institutions and local governments, makes effective use of national housing policy funds, and allows us to supply cheaper and more stable housing," Jeon said. The plan envisions a structure in which the public sector provides the land, the central government supports the project through the Housing and Urban Fund, and public institutions build the homes.
The figure of 300 million won for a mid-sized Gangnam apartment, however, does not represent a resident's total housing costs. Because buyers do not own the land, they must pay land rent on top of the purchase price. Whether enough publicly owned land can be secured in Gangnam, and who would bear the cost if new land had to be purchased, are also variables that will determine how many units can be supplied. In existing land-lease housing projects, land rent has in fact been set separately from the presale price.
Expanding Youth Rentals Near Subway Stations: "We Must Think About Homes People Can Afford"
Alongside land-lease housing, Jeon proposed expanding "Cheongnyeon Yunseul," a public rental housing program for young adults that uses sites near subway stations and other public land. She also floated a plan to rebuild aging public housing and to have the public sector capture part of the development gains generated by redevelopment and reconstruction projects, in the form of land and housing, for reuse in public housing supply.
Rather than selling publicly owned land for a one-time gain, Jeon's plan calls for holding onto it and using it for housing supply.
"How many homes we supply matters, but what we now have to think about is how to supply homes that people can actually afford," Jeon said.
"Separating ownership of land from ownership of housing and expanding land-lease housing so that anyone in this country can live without worrying about a home — that is what I mean by basic housing," she said.
