The so-called "first-come, first-served" non-priority application will now only be open to those without a home. Since winning can yield profits in the millions of won, the non-priority application, which has also been referred to as "lottery application," will limit applications from those with homes due to the signs of overheating.
Residential requirements will be flexibly applied depending on the situation in areas where the non-priority application is conducted. Areas with significant market profits or competitive housing sales will have residential conditions imposed by the relevant metropolitan government, while in areas with insufficient application demand, applications may be conducted nationwide without residence requirements. With this improvement to the application system, the competition rate for non-priority applications is expected to decrease by up to 60%.
The Ministry of Land, Infrastructure and Transport announced on the 11th that the non-priority application system will be improved. Kyung-Hun Kim, the Deputy Director of Housing Policy at the Ministry, said, "We will reform the system to align with the original intention of the application system, which is to support those without homes."
The non-priority application system being improved by the Ministry is a type known as "resupply after contract withdrawal," where new residents are selected from leftover units when existing winners withdraw from contracts or are found ineligible. Currently, any adult residing in the country can apply for the non-priority application, regardless of housing ownership, residence area, or the existence of an application savings account. Consequently, the non-priority application in apartment complexes with the potential for profits in the millions of won has shown signs of overheating. Last year, the non-priority application for the Dongtan Lotte Castle saw nearly 3 million applicants seeking a market profit of about 1 billion won.
As the non-priority application system shows signs of overheating, the Ministry will limit eligibility to only those without homes for the non-priority application. If you have a home, you are no longer able to apply for the non-priority application.
Residence requirements will be flexibly applied according to regional conditions and allocation situations. Mayors and district heads may impose residence requirements on the relevant metropolitan government at their discretion, considering market conditions. In simpler terms, regions expected to experience significant market profits or intense competition may see local governments impose residence conditions when announcing applications for new residents. Conversely, it's also possible to conduct nationwide applications in regions without such requirements.
A Ministry official noted, "While the local government and the Ministry will have prior discussions about the residence requirements, the discretion of local governments is considerable," and added, "We will distribute related guidelines to local governments." The official further stated, "Implementing local restrictions may limit applications in popular areas like Seoul and the metropolitan area, but we believe the negative impacts arising from the overheating of the application market are more significant, which is why we have made this policy decision."
By allowing local governments to flexibly impose residence requirements considering local conditions, it is expected that frequent changes to the application system in response to market conditions can be avoided. The Ministry has received criticism for the inconsistency of the non-priority application system in relation to the real estate market. In 2021, during a period of soaring housing prices, the Ministry limited the eligibility for non-priority applications to "those without homes residing in the area," but has now improved the system to allow applications regardless of residence or housing ownership after two years.
Furthermore, with this improvement to the application system, the competition rate for non-priority applications is expected to decrease, increasing the possibility for housing seekers to obtain their own dwellings. The Ministry analyzed the non-priority application conducted last year for the Dongtan Lotte Castle in Hwaseong City, Gyeonggi Province, and found that the ratio of homeowners was as high as 40%. Applicants falling under the homeowner and Gyeonggi Province residence requirements accounted for 60%. Had the improved non-priority application system been implemented, about 60% of current applicants would not meet the eligibility criteria for applying to the non-priority application for Dongtan Lotte Castle.
The Ministry plans to finalize the amendment of the housing supply regulations containing these details by as early as May and no later than June. As of now, there have been no reports of new developments applying the improved non-priority application system.
Meanwhile, in order to prevent illegal behaviors such as false relocations to increase points for the number of dependents when applying, the Ministry will require additional documentation to verify actual residence. Previously, the verification of dependents was limited to documents like family relationship certificates and resident registration records. However, from now on, they will also verify health insurance reimbursement details utilized by dependents at hospitals and pharmacies to confirm actual residency. This verification will include three years of records prior to the application announcement date for direct ascendants and one year for direct descendants over the age of 30.