The government has taken a stand on the regional housing project associations (community housing), where local residents build their own multi-family homes. Following President Lee Jae-myung's statement, "There has been a major incident involving community housing, and I understand that the issue is serious," the government immediately began reviewing the community housing system.
Community housing is so fraught with challenges from land acquisition that it is often said, "Do not even recommend it to an enemy." Many projects remain unapproved for long periods. Some funds are tied up due to excessive contribution costs, and there are instances of corruption in association management.
On the 9th, the Ministry of Land, Infrastructure and Transport announced plans to conduct a comprehensive review of community housing projects through local governments by the end of August. After identifying issues in the system and operations, it intends to develop measures to improve the transparency of community housing projects and prevent disputes and conflicts.
Community housing allows local residents to autonomously form associations, acquire land directly to construct dwellings, and receive supply without competition. This system was introduced in 1980.
Once the promotion committee is formed, the project site is selected. If rights to use more than 50% of the project site are secured, they can obtain approval from the district office and begin recruiting members and signing contracts for the purchase of the project site. Tasks such as member recruitment and management, land acquisition, project planning, and all related permit procedures until completion can be entrusted to an agency.
If more than 80% of the usage rights and over 15% of the ownership of the project site are secured, approval for the establishment of the association can be obtained. After the establishment of the association, if more than 95% of the target site is owned, project plan approval is granted, and the full construction process begins.
◇ There are 'noises' everywhere in community housing… issues with association management and construction costs ballooning
Community housing was introduced to promote the supply of dwellings for the underprivileged, but many issues have arisen during the process. According to a survey conducted by the Ministry of Land, Infrastructure and Transport from the 20th of last month to the 4th of this month, out of 618 community housing projects nationwide, 187 associations (30.2%) experienced 293 disputes.
Types of disputes primarily include poor association management and delays in withdrawals and refunds. The chairperson of association A was reported to the police for embezzlement and breach of trust after collecting entry fees from members into a financial institution account rather than a designated trust account. Association B received notification of some members' disqualification from the local government but continued to collect contributions from those members without informing them. When the affected member sought a refund upon realizing this, the association refused.
There are also disputes between associations and construction companies. Delays in phases such as land acquisition result in significantly increased construction costs, heightening the burden on members. According to the Ministry of Land, Infrastructure and Transport, in one community housing case, the construction company requested an increase in construction costs amounting to 930 billion won, approximately 50% of the initial contract amount, due to delays in actual construction and price fluctuations.
As of the end of last year, 51.1% of the total 618 associations, equating to 316, were still in the recruitment stage without receiving establishment approval. There are also 208 associations (33.6%) that have not received establishment approval for more than three years after recruitment notification. The 'Cheonggye SK View,' regarded as a success case for community housing, took 12 years from the formation of the promotion committee to completion.
◇ President Lee mentions 'community housing issues' twice… Ministry of Land, Infrastructure and Transport likely to enhance project transparency
With problems in the community housing system continually arising, the government has announced overall improvements. It has been 45 years since the system was established. The Ministry of Land, Infrastructure and Transport is expected to enhance transparency in the management of associations to prevent member harm. There is a high likelihood of tightening the qualification standards for agencies involved before the establishment of associations. Currently, an agency can be established with only 300 million won in capital.
There is also a possibility of implementing measures requiring agencies to fully disclose their operating conditions to members. Essential information such as the criteria for member qualifications, contribution amounts, land acquisition status, withdrawal and refund procedures must be provided, but verifying this information is challenging.
These system improvements seem to have been influenced by President Lee mentioning the issues with community housing twice. He ordered the Ministry of Land, Infrastructure and Transport to improve the community housing system at the first cabinet meeting following his inauguration on the 5th of last month. According to the minutes of the cabinet meeting, President Lee said, "There has been a major incident involving community housing, and I understand that the issue is serious. I know that conditions are violated when recruiting housing association members or that unfair benefits are being taken from members, and that a nationwide investigation must be conducted promptly on these matters."
Later, on the 25th of the same month, at the 'Gwangju Citizens and Jeonnam Province Town Hall Meeting' held at the Gwangju National Asian Culture Center, President Lee responded to a citizen's inquiry regarding community housing, saying, "I have already directed a survey of the real situation and the preparation of possible measures, which are under review, so please wait."
The Ministry of Land, Infrastructure and Transport stated, "We plan to thoroughly investigate the system and operational issues through current status surveys and inspections and to devise measures to enhance the transparency of community housing projects and to prevent disputes and conflicts based on the survey results."