Room service for all?On Thursday, the government is expected to announce its 24th set of real estate measures to cool the real estate market and address a shortage of rental properties in Seoul. The measures reportedly include the idea of the government purchasing hotels in downtown Seoul and transforming them into apartments leased on jeonse (long-term deposits) or monthly rent contracts after the ruling Democratic Party’s (DP) Chairman Lee Nak-yon on Tuesday signaled a creative way through the impasse. The main opposition People Power Party (PPP) scoffed at the idea, as seen in a PPP lawmaker asking if the liberal government’s real estate policy has ended up with hotel rooms.
Appearing on a television program earlier this month, Blue House policy chief Kim Sang-jo warned about the “possibility of a prolonged transitional period from drastic changes in the real estate market after the DP passed three rent acts” in the National Assembly last month to protect tenants’ rights. He asked the public to wait until the government comes up with solutions. However, public rage is growing as the Moon Jae-in administration toys with ludicrous ways to ease shortages of apartments for rent without taking any responsibility for the mess in the real estate market.
You can hardly find fault with the liberal government’s attempt to take advantage of more than 50 vacant hotels in Seoul, including five-star hotels in Gangnam, southern Seoul, since the Covid-19 outbreak began in February to help ease the worsening apartment shortages. Some of the hotels have already transformed into dormitories for college students. But such a solution was devised to help the struggling hotel industry survive the pandemic, not to serve as a fundamental way to address housing and real estate issues.
The Seoul city government’s botched experiment with the Benikea Hotel tells all. Seoul Housing & Communities, a housing arm of the city administration, purchased the downtown hotel to use for residential purposes and looked for residents. But 180 out of the 207 applicants canceled their final contracts because of the massive cost needed to renovate hotel rooms for a four-member family to live in. Even if Korea Land & Housing, a housing arm of the central government, takes over, it can only offer rooms for about 300 households per hotel.
If flocks of tourists start returning again, where are they going to stay? The Moon Jae-in administration has repeatedly tried to find quick fixes instead of looking for fundamental solutions to fix the broader system. We wonder why the government does not try to resolve the critical shortages of rental units by increasing supplies rather than suppressing demand.
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