The Korea Land and Housing Corporation (LH) is incurring a staggering loss of 110 million won (approximately US$82,000) for each public rental housing unit it constructs, according to a recent study. Experts are calling for a substantial increase in government subsidies to ensure the sustainability of public rental housing programs.

A policy forum co-hosted by LH and Rep. Min Hong-cheol revealed a significant discrepancy between government subsidies and actual construction costs for integrated public rental housing. According to a study by Professor Jin Mi-yun of Myongji University's Graduate School of Real Estate, the government allocates 191 million won per unit for construction, while LH’s actual expenditure stands at 302 million won per unit.

The widening gap is primarily attributed to soaring land prices, inflation, and stricter regulations on transportation infrastructure. Consequently, the government's subsidy rate, which was 90.5% in 2016, plummeted to 62.2% last year.

LH has traditionally offset these losses through profits from land development. However, with large-scale land development projects becoming less feasible and the aging of existing public rental housing increasing maintenance costs, the corporation is facing financial strain. Raising rental fees for low-income tenants is not a viable solution.

"Public rental housing is inherently a debt-accumulating structure, but it also creates assets for the government," Professor Jin said. "Advocating for a reduction in public rental housing due to LH's debt would be overlooking the positive aspects of this program."

Experts argue that the government must increase its financial support to ensure the continued provision of affordable housing for low-income households.

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