KDI Brief No.102 (September 21, 2017)Subscribe
|Rental Housing Policy in Response to the Increase in the Share of Wolse
In Korea, jeonse is continuing to decrease while monthly leases (‘wolse’ in Korean) increase, particularly among the young and senior populations. Indeed, compared to other age groups, they face larger financial and credit constraints. Thus, a market for wolse with deposit must be created with quality homes and varying deposits to establish a broader range of housing choices for these groups. To that end, policy efforts are needed to eliminate any loopholes in support programs in order to secure housing stability for senior wolse tenants who are in the bottom income decile.
Low interest rates cause jeonse lessors to increase the deposit or convert to wolse with deposit.
Lessors make use of their strong bargaining power to induce tenants to choose wolse instead of jeonse amid the growing trend of high jeonse deposits.
The RIR of wolse tenants is higher than that of jeonse tenants.
The rental housing market is exhibiting a continued trend of decreasing jeonse and increasing wolse particularly among the young and seniors.
The level of monthly income of the young and seniors is mostly lower than other age groups.
The RIR of young and senior wolse tenants is higher than that of other age groups.
Almost a half of senior wolse tenants in the bottom income decile were found to spend over 50% of their income on housing.
Most young and senior tenants live in multi-unit housing or ‘other housing’ with poor service quality.
Of senior wolse tenants in the bottom income decile (D1), an estimated 73,000 are excluded from the government housing support program.
The financial resources for the rental housing policy need to be distributed to vulnerable groups such as low income and senior households.
A rental housing market must be created where financially burdened tenants can choose from a variety of quality wolse homes with varying deposits.
The New Stay project needs to shift its focus towards using existing rental apartments (unoccupied) instead of building new ones.