Past, Present, and Future of Social Housing in Seoul: Where Is Social Housing Heading to?

Abstract

In Seoul, a metropolitan city, affordable housing is a major issue. Since 2012, social housing has been implemented as a means to solve housing shortages in the South Korean capital. Various policies in different times have been applied, and Seoul came up with a unique form of social housing: providing housing to those in need. The purpose of this paper is to review the development of social housing in Seoul and to discuss policy implications. First, this paper defines the concept of social housing in Seoul by comparing that of social housing in Western countries. The major differences in the concept of social housing between Seoul and Western countries lies in the provider of social housing. The providers of social housing in Seoul are social economy actors, including non-private organizations and cooperative unions that work as agencies to pursue the public interest. In addition, this paper presents an overview of the historical development and specific features of social housing. Finally, a discussion is presented on the implications for social housings, including the need for the allocation of social housing throughout the city, the extended length of residence, and reliable financial support to social housing providers.

1. Introduction

One of the most basic human needs is to attain a safe and comfortable place to shelter where one can live, rest, and flourish. However, obtaining decent housing is not guaranteed to everyone in modern-day South Korea, and further, acquiring one’s own private housing seems to be a life-time but futile effort. Thus, people are consumed by the dream of owning their own homes. In the metropolitan city of Seoul, obtaining affordable housing options seems almost impossible because of various financial hurdles such as escalating housing prices and a housing supply shortage. Based on the Price-to-Income Ratio (PIR) in 2020, the number of years it takes to buy a house spending the entire income, people in Seoul Metropolitan City needed a sum of money equal to 24.58 years of income to buy an apartment unit in Seoul [1]. In 2020, the average housing price in Seoul was US $571,000 [2]. In addition, three challenges exist for young adults and newly married couples, who are emerging as new vulnerable strata of the population and are deprived of the possibility to own housing. These challenges are fewer full-time jobs, enormous education debt, and out-of-control housing costs [3]. In the midst of the crisis of not being able to own a house, social housing has become a significant alternative in solving housing problems for working but houseless Seoulites. Under the public housing umbrella, social housing in Seoul Metropolitan City intends to provide decent housing properties to people with just needs and rights at less than the current market price and for a more secure rental period.

According to the 2018 Organization for Economic Co-operation and Development (OECD) data, the proportion of social housing out of the total housing stock in various countries was as follows: Netherlands (37.7%), Denmark (21.2%), Austria (20.0%), the United Kingdom (16.9%), France (14.0%), Ireland (12.7%), and South Korea (6.8%) [4]. The average rate of social housing based on the OECD data is 7.9%. According to this data, the proportion of social housing in South Korea is lower than that of other European countries and the OECD mean [4]. To expand this viewpoint, it might be the right time to take a closer look and reevaluate South Korea’s position regarding the social housing policy. By pinning down the meaning of social housing in Seoul, South Korea, and tracing how Seoul has been dealing with housing shortages for the past years, a renewed perspective to provide more affordable housing for more people can be offered. Therefore, the aims of this review paper are fourfold: (1) to review the definitions of social housing, (2) review the historical development of social housing, (3) investigate the current social housing situation in Seoul, and (4) discuss the future of sustainable social housing in Seoul.

2. A Review of the Definition of Social Housing

It is difficult to agree on a set of definitions for the term social housing. In fact, the concept of social housing and terminology itself differ in different countries. The OECD defines social housing according to Del Pero et al. (2016), who referred to it as a “residential rental accommodation provided at sub-market prices and allocated according to specific rules rather than according to market mechanism” [5] (p. 36). According to the United Nations Economics Commission of Europe, social housing is “supplied at prices that are lower than the general housing market and it is distributed through administrative procedure” [5] (p. 6). Furthermore, Scanlon, Whitehead, and Arrigoitia (2014), citing Haffner et al. (2010), noted that “a consistent identification of social housing is to provide living spaces to the households through administrative allocation process which gives priority to candidates with needs” [6] (p. 3). Taken together, common criteria of social housing include subsidies such as low-interest loans, below-market rent, long-term accommodations (long-term rent), and target groups with limited financial resources [7].

Understanding social housing as a broader concept, more specific and diverse terminologies exist that are bound to certain policies or administrations. To acclimatize social housing policy to the different situations and conditions of different countries, each country uses slightly different terminologies to refer to social housing. For example, in Denmark, “common housing” or “not-for-profit housing” is used, in Finland it is referred to as “government subsidized housing,” and in England the terminology “social housing” is employed [8] (p. 7). This varied and slightly inconsistent use of terminologies for social housing in different countries makes it difficult for researchers to compare and contrast social housing schemes worldwide.

Kemeny’s (1995) theory of housing rental systems is often used to define characteristics of social housing [9]. There are two models of a rental housing system: the unitary and dualist rental markets [9]. The unitary rental market defines that social rentals can compete with private rentals in the market without special protection. The dualist rental market implies that private rentals are dominant so that social rentals and private rentals cannot compete in the market and social rentals are operated as a safety net. In the dualist rental model, the providers of social housing are controlled by the government (p. 856) and the access to social housing is based on a means test [10]. Based on this theory, the social housing system in Seoul can be characterized as the dualist rental market since social housings are targeted for socially and economically disadvantaged such as people with disability, people receiving public assistance, or the elderly living alone who need some type of assistance.

In South Korea, the term social housing was first used in 2010, while the Enactment of the Seoul Social Housing Act was established in 2015 [11]. Since the use of the term social housing was relatively new and foreign to the public in Korea, the term “public housing” is more often used and familiar to the majority of citizens. The first public housing, built in the 1980s, still covers the role of social housing in Korea today [12]. The two terminologies, public housing and social housing, were used in diverse ways in different times in Korea, but served the same objective, namely, to stabilize housing shortages for those with need, especially low-income citizens [13]. Thus, researchers in Korea have often used the term public housing and social housing interchangeably.

Figure 1 compares the different understanding of public and social housing in Western countries and in Korea. Choi (2019) stated that, in Western countries, the concept of social housing encompasses public housing, while in Korea, social housing and public housing are classified separately under another broader umbrella term, namely, “public-social housing” [14] (please see Appendix A).

There is a slight difference between the main entity of the ownership of public housing and social housing based on who owns the estate. Public housing is owned by the central and local government, while social housing is owned by various social economy actors including nonprofit organizations, cooperative unions, and social enterprises, resulting in the narrower scope of defining social housing in the Korean context. Because of the unique circumstances of public and social housing in Korea, this paper discusses these two terms separately. Furthermore, this paper focuses on social housing in Seoul, which originated through the Enactment of the Seoul Social Housing Act. This so-called “Seoul social housing” emerged through the collaboration of the public and private sectors to supply, administer, and manage social housing at a below-market price with an ensured tenure period [14]. Here, the private sector refers to actors in the social economy responsible for housing providers, which aim to pursue public interest rather than maximize profit [14].

3. A Review of Historical Development of Social Housing

3.1. A Brief History of Social Housing in Western Countries

Social housing emerged in the late 19th century, when charity and philanthropic organizations voluntarily helped marginalized people in European countries [15]. In England, which has a long history of social housing, a housing shortage resulted from the population explosion after the industrial revolution [16]. Some philanthropists and factory owners built residences for factory workers. Philanthropic organizations realized that a sole effort by private organizations to provide housing for factory workers could not solve the housing crisis. In most European countries, after World War II, housing shortages led the central and local governments to invest in supplying large-scale social housing to help the economy recover from postwar economic difficulties [15].

Nevertheless, how and why social housing emerged as a solution to housing shortages vary between countries. Especially in Western Europe and North America, people experienced severe housing problems due to rapid industrialization and urbanization. The most urgent issues were housing shortages, deteriorating housing environments, and increased housing costs [15]. To solve these problems, long-term rental housing supplied by the public sector and nonprofit organizations was implemented.

3.2. Historical Development of Social Housing in South Korea

3.2.1. Phase 1: The Beginning of Public Housing

Similar to what happened in many Western countries, industrialization and urbanization emerged in 1960 in South Korea. The urban population skyrocketed, and a shortage of housing arose [17]. At the time, a religious organization received money from a German charity and bought land and built housing for people who were forcibly driven from their homes by rapid urban development [17]. This particular housing can be considered the first public housing in Seoul, Korea. As mentioned, public housing in Korea is regarded as social housing in Western countries.

3.2.2. Phase 2: Growth of Public Housing

As economic growth progressed, housing problems became more serious. Since the 1980s, it has become one of the most pressing national problems [18]. In 1989, the central government supplied the first public housing to low-income families, which shared some common characteristics with social housing [12]. Until then, the term public housing was used, not social housing. The Korean government built a large-scale complex of apartment buildings in the remote and undeveloped regions of the city for public housing. Public housing was distinguishable from private housing as the term public housing was written on the walls of the apartment buildings. This public housing stigma resulted in the segregation of low-income families, as the fact that they lived in this public housing separated them from other neighborhood tenants, who were mostly well-to-do families. Since then, public housing has often been attached to a stigma related to poverty [19]. While the implementation of public housing might not have intended to bring about the physical exclusion of lower-income families, it had the negative effect of impeding social integration [19].

3.2.3. Phase 3: Challenges and Issues of Public Housing and the Need for Social Housing

There are three challenges of public housing. The first challenge for providing affordable housing to citizens was finding an adequate way to finance the projects. Public housing providers received low-interest loans from government-affiliated banks and were subsidized by the Government Housing Fund. However, the amount of support from the government was far below the actual construction and maintenance costs, which meant that capital financing had to be secured for new constructions. This lead to a housing shortage [19]. In particular, Seoul City Housing Municipal did not consider the varied real estate costs of different parts of the city, and with a uniform standard for financing, public housing projects faced increasing financial losses. Furthermore, financing private-sector projects was not easy. Housing prices continued to increase after the global economic crisis in 2008. In addition, newly started construction of public housing plummeted and the mortgage rate increased, which led to increased rental fees and housing costs for tenants [20]. The providers of private rental housing ran their rental business for profit, and their rental fees were higher than that of public rental housing, which made it even more difficult for economically disadvantaged groups to attain houses through private rental housing plans.

The second challenge for rental housing was recent demographic changes. As of 2018, 32% of all residents in Seoul lived in single households [21]. Among these single households, the elderly population also increased considerably from 4.0% in 2000 to 5.8% in 2018 [22]. This change in demographics is a significant link to further housing shortages. Because the public housing built in the past was designed for four-people households, there are not enough smaller units for single households [3]. Consequently, such small rental housing units are in great demand in response to current demographic household structure trends. In addition, young adults aged 20 to 30 years tend to leave the city of Seoul because of the high housing costs. The proportion of young adults who left Seoul increased from 29.7% in 2003 to 46.2% in 2014 [3].

The third challenge regarding rental housing is fierce opposition from the surrounding neighborhood comprising public rental housing. For example, in the 2010s, the Seoul office planned to build 3300 apartment units to provide as public housing; however, strong resistance from local residents, municipality parties, and politicians stopped the plan [3]. Reasons for the opposition include concerns for local slumming, violation of the personal right to have views unblocked by apartment buildings, and increased traffic problems [3]. Furthermore, the number of complaints against constructing public rental housing peaked in 2018–2019 [23]. This indicates that building more new public housing is hampered, resulting in a shortage of public rental housing to be offered to those in need.

Taken together, providing public housing by the governments reaches its limit and the government and private sector need to revisit the public housing policy in order to solve housing problems in Seoul. It was supposed to supply affordable and stable housing to citizens in need, and the newer term and concept of social housing has now emerged to compensate for existing public housing.

3.2.4. Phase 4: Birth of Seoul Social Housing

Since 2012, the social housing plan has been taking a more progressive shape. Seoul was the first city in South Korea to provide social housing and various support policies for houseless citizens [24]. Interestingly, in 2012, the Cooperative Union, one form of private-sector organization, took initiatives to supply social housing [24]. The Cooperate Union further developed social housing polices, and Seoul City Housing Municipal in the public sector followed this private-sector initiative [25].

Table 1. Development of social housing in Seoul.

Year	Events
2012	Establishment of Social Investment Fund
2015	Enactment of Seoul Housing Act
2016	Opening of Total Support Center for Social Housing
2017	Establishment of Seoul Social Housing Ritz
2018	Establishment of Land Support Ritz
	Establishment of Korea Housing and Urban Guarantee Corporation (HUG)

summarizes the progress of social housing development [26]. In 2012, Seoul established the “Social Investment Fund” and implemented policies that provided subsidies and land loans to social housing providers. In 2015, the Enactment of the Seoul Housing Act was set out as the first decree for social housing. Based on this enactment, the concept of social housing was finally concretely defined to mean rental housing for socially and economically disadvantaged people. It was to be supplied by social economy actors such as nonprofit organizations and the Cooperative Union. According to this enactment, social housing was located in a socially mixed environment that aimed to solve the problem of previously built public housing blocks of geographically segregated public housing estates. In 2018, the Housing and Urban Guarantee Corporation (HUG) was established to help social housing providers provide financial support and consultation for the social housing business.

4. Seoul Social Housing

4.1. A Category of Public Interest Housing in Korea

Although this paper focuses mainly on Seoul social housing, it is worth reviewing the bigger picture of public social housing in South Korea. Currently, there are three categories of public–social housing: public housing, semi-public housing, and social housing (see

Table 2. Different types of public–social housing in Seoul.

	Public Housing	Semi-Public Housing	Social Housing
Supplier	Central and local government	Private company	Social economy actor
Financing	Public funds	Private capital or loans	Public & private loans
Eligibility	1–4 quartile income of city workers	None	Lower than 6th quartile
Rent	30–80% of the market price	Below the market price	Less than 80% of the market price
Residency	10~20 years	10 years	10 years

) [27]. For public housing, only the public sector such as the central and local governments can provide the budget and funds to supply housing to citizens in need of rent below the market price. There are two ways to do this: (1) buy land and build housing on that land, and (2) buy existing housing from the market and supply housing. Regarding semi-public housing, private companies supply housing to the public who have no eligibility to rent housing at a lower price than the market. These private companies are endowed with two benefits: borrowing low-interest loans from the government and receiving government favor such as tax cuts or Floor Area Ratio (FAR) advantages, meaning that the total floor area can be increased. With respect to social housing, social economy actors supply housing to the public in need. These social economy actors can receive financial support such as a low interest rate from the public sector through the public–private partnership, in which the public sector provides financial benefits to providers to supply social housing. Social housing targets moderate-to-low-income tenants who earn a higher income than those in public housing. The financing and eligibility for social housing are detailed in the next section.

Figure 2 presents the allocation of public housing and social housing in Seoul [28]. In general, the locations of public housing and social housing do not tend to overlap each other and social housing is more likely to be placed evenly throughout the city, whereas public housing is clustered in a certain part of the city. In addition, based on the available data of 2017, the number of public housing units is estimated at 271,308 [29], while the number of social housing units is 239 [14].

4.2. Models of Social Housing

There are three types of social housing models from the housing provider’s side: Land lease housing, renovation of nonresidential buildings, and renovation of empty houses (see

Table 3. Types of social housing.

	Land Lease	Renovation House	Reviving Empty House
Rent	20% less than the market price	20% less than the market price	20% less than the market price
Tenure	Up to 10 years	6–10 years	6–10 years
Eligibility	Employed and the mean monthly income is 70–100% or less	Employed and the mean monthly income is 70–120% or less	Employed and the mean monthly is income 70–120 or less

). For land lease social housing, social housing providers borrow land owned by the Seoul city government for 30–40 years at a low interest rate and build housing on that land [28]. Regarding the renovation of nonresidential buildings, social housing providers renovate old nonresidential buildings such as hostels or dormitories with financial support from the city government. Financial support is determined by the rental period. In terms of the renovation of empty houses, social housing providers renovate homes that have been abandoned for more than six months. The city government subsidizes construction fees to renovate empty houses according to the rental size. The target group for the three models of social housing is the vulnerable working population such as young adults, newly married couples, or low-income families. Housing is allocated through an income test to mostly middle-to-low-income households. Rent for all three types of social housing models is less than 20% of the market price [28]. Eligibility for all three types of social housing is determined by employment status and income [30]. Specifically, as for a single-person household, mean monthly income is less than US $3,882, and with respect to two-person households or above, mean monthly income is less than US $4,840. As for a newly married couple, the eligibility for mean monthly income is less than US $5,832.

4.3. Architectural Aspects and Allocation of Housing Units

To date, the total number of social housing stock units in Seoul is 1275 (see

Table 4. Social housing stock (units: housing units).

Year	Land Lease	Renovation House	Reviving Empty House
2015	22	0	80
2016	114	37	152
2017	80	145	14
2018	272	89	0
2019	209	61	0
Total	697	332	246

Reference: Choi (2019). New providers of affordable housing. Housing Welfare Conference.

). Of the three types of social housing, the number of land lease houses tended to increase, while renovation buildings and revival of empty houses decreased. Figure 3 shows the allocation of social housing in the city of Seoul. More social housing is located in the northern part of Seoul than in the southern part. The northern part of Seoul is an old town and the southern section is a new town. The poverty rate in the northern part and the southern part is 3.98% and 2.68%, respectively [31], implying that the northern part has relatively more poor people. This condition may affect that more social housing has been built in the northern part.

5. Future Directions for Sustainable Social Housing

Korean social housing was launched to solve housing problems and create a more sustainable social housing scheme. The social housing system systematically operates and manages the housing community by establishing the self-government rules written by the tenants and the management rules as a management entity to revitalize the autonomous resident community. In addition, the social network was restored by promoting the revitalization of sustainable and self-sustaining communities and by establishing community-based social housing and regional regeneration anchor facilities. The social housing is mandated by legislating the composition and operation of communities and people-centered living spaces are being operated. From the economically sustainable perspective, the burden of land purchase costs was relieved when developing social housing projects by reinforcing social publicity through long-term lease of land.

Nevertheless, some issues still need further consideration. First, social housing needs to be equally located throughout Seoul and not concentrated in only one region. Geographically grouped locations separate the tenants of social housing from other private-housing neighborhoods [32], creating a segregation effect. One way to avoid this undesirable circumstance is to locate social housing sparsely throughout the entire city, which would ensure that no region or neighborhoods are tagged with the negative connotation of social housing. This strategy will decrease the segregation effect, because the tenants of social housing will be living in every neighborhood in Seoul. For example, in Vienna, Austria, social housing accounts for 43% of all housing options and is distributed throughout the city [14]. However, in some cases, limitations seem to exist for this mix-in strategy. Residents of private housing often mark their private property with iron fences on public pedestrian passages to prohibit the residents of public rental housing from trespassing in South Korea [19]. Even worse, residents of social housing and private housing on the same estate divide the use of elevators, which results in segregation within a property. This phenomenon is of great concern to all involved in social and communal living. Such a problem is not limited to South Korea. For example, in Belgium, residents of social housing were seen as being problematic, because they often did not pay rent and vandalized properties of social housing [33]. A key solution to this problem might be the concept of a “social mix,” which is the mix of social and private housing in one building [34]. Socially mixed social housing does not only mean physical buildings geographically spread equally throughout a region, but also an identity of being a “mixed” community of social and private housing [35]. A live example can be found in Belgium, where the Minister announced the policy document requesting social mix for social housing communities and a whole society for all citizens to acquire a life of quality [33]. Supporters of the social mix believe that if social housing is indistinguishable from private housing, no stigma will be attached to tenants of social housing. Ultimately, the intention is to build social housing with residents of various demographic backgrounds and neighborhoods a harmonious and pleasant place to live, leading to social integration.

Second, the length of the residential period needs to be extended to more than ten years to secure residential tenancy. For social housing in Seoul, contracts are renewed every two years up to five times, meaning that a tenant can live in social housing for up to ten years if eligible. This ten-year tenancy time limit does not guarantee that tenants may be able to live in the place they want without having to move. However, assured housing tenancy must be reflected in social housing policies, so that tenants can obtain the same quality of life with guaranteed tenancy as those with private housing. Guaranteed tenancy is related to lower rent burden and stability [36], which enables the reliable planning of family matters. In Singapore, the government leases social housing for up to 99 years, which provides residents with assurance and is considered as good as a permanent home [37]. Likewise, with reference to Singapore, the state government of Hawaii in the United States proposed the utilization of state-owned lands to build social housing and sell it to the public, especially to low-income families and non-homeowners without a means test for 99 years [38], prioritizing low-income families. However, some bring up the notion of equity in housing security [39]. For example, people on a housing wait list may not be able to obtain social housing if a tenant does not move out within scarce social housing resources.

Third, it is necessary for tenants to participate in the management of social housing. It is widely considered good practice for tenants of social housing to express their opinions [40]. Tenants’ involvement in social housing provides a high level of satisfaction with social housing services and increases their self-esteem, as they are able to participate in and contribute to community living [41]. This type of participation created a saving of up to 118 million euros [41]. For example, in Denmark, based on the 1984 Law on Tenants Democracy as one of the key principles of social housing, residents manage each housing estate [6]. In this way, tenants’ participation in the management of social housing can prevent them from being marginalized [42].

Last, a reliable financing system to construct and manage social housing is needed. The rent for social housing in Seoul is almost as high as that for private rental housing. The rent for social housing does not cover the current costs of construction and maintenance; therefore, without the government’s greater contribution, social housing providers cannot help but reduce their revenue or increase rent. However, currently, even the central government does not provide funds to social housing providers, worsening this situation. At the moment, only local authorities (municipalities) provide financial support. To lower the rent for social housing, the local government must establish a set of systems through which providers can supply social housing at an affordable price. One way for the government to overcome this obstacle is to reduce the land value by turning land use to a form of public land for social housing providers at below-market prices [6] (p. 327).

6. Conclusions

In Korea, before the concept of social housing emerged in 2012, the public and private sectors independently took charge of providing housing. Social housing allows collaboration between the public and private sectors to supply housing, meaning that the private sector receives benefits and assistance from the local government to build such housing. Social housing in Seoul fills a gap in the housing supply for those who are not eligible for public housing but still have insufficient income to rent at market prices. In this sense, social housing in Seoul is an alternative housing system to provide a safety net for houseless Seoulites.

In order to be more sustainable in providing social housing in the future, the following four issues should be considered. First, with the preparation of legal basis at the central government level, all social-housing-related parties basically follow the ordinances of Seoul City, but local governments in Seoul should establish suitable ordinances in accordance with their situations. Second, all social housing projects undertaken in Seoul should be thoroughly analyzed to develop new sustainable business models to diversify supply methods. Third, Seoul city government needs to support revitalization of community based on “social mix,” which realizes the social values and activates various community-based communication programs in social housing, and this will contribute to create local-related jobs centered on services that are enjoyed on a daily basis. Finally, to cultivate and strengthen the capabilities of social housing providers, effective education on social economy, housing design, construction, operation, and finance is needed, and to continuously discover the improvements in managing social housing, opinions from the residents and providers through regular meetings such as forums and seminars should be collected.

Lastly, this paper will discuss some limitations and suggestions for future studies. This study analyzed only one city—Seoul—but it would be interesting for future studies to compare other countries’ social housing forms with that of South Korea, in an international context, to examine the differences and similarities. In addition, this study does not include various stakeholders’ perceptions, such as that of residents’ organizations or directors of the social housing associations. This limits the presence of multidimensional perspectives of social housing. Future research is needed to include both residents and providers of social housing.