Korean newlyweds stay single on paper for housing benefits

Miniatures of apartments for a housing subscription, or raffle on presale apartments, are displayed at a model house in Gangdong District, eastern Seoul, on Dec. 4. [YONHAP]

Korea’s dual-income newlyweds are disguising their legal marital status to avoid stricter standards on social benefits. Married couples in Korea are at a disadvantage compared to singles when it comes to house subscriptions and loans.

“We have a better shot at getting a house as two single-person households,” a 31-year-old surnamed Choi, who tied the knot with a coworker in May last year, told the JoongAng Ilbo.

Many newlyweds they know also have not filed their marriage document at a district office, he added.

A key reason why newlyweds decide to remain single on paper is the house subscription, a Korean regulation system that allocates presale apartments through a raffle. Due to soaring property prices, this method is widely viewed as the most cost-effective way to buy a new house.

To be eligible for a raffle specially allotted for newlyweds, a dual-income couple’s monthly income must be under 140 percent of the average household income of city workers, and single-income newlyweds under 130 percent. This is around 9.11 million won ($7,000) for dual-income pairs and 8.46 million won for single-income couples.

The income eligibility is even lower for an open-for-all general subscription, dropping to 6.51 million won per month.

That means a couple that earns 5 million won apiece will not qualify for the lottery if they get married.

Singles also have an advantage over married couples when it comes to housing loans. The so-called “stepping stone loan” run by the Ministry of Land and Korea Housing & Urban Guarantee Corporation offering low interest rates was open to newlyweds who earn less than 70 million won combined per year. The same income ceiling applies to a single living alone and applying to buy a house for the first time.

Another government-subsidized housing loan, dubbed “nest loan,” offers preferential interest rates to newlywed households with a combined annual income below 70 million won. The same benefit is available for a single-person household earning less than 60 million won.

The government announced plans to lift the bar for newlyweds by 15 million won moving forward in the economic policy paper on Tuesday, but the income cap will still be only slightly higher than the average income of first-year newlyweds, which was at 80.4 million won last year, according to Statistics Korea.

Korea’s earned income tax credit (EITC), a refundable tax credit for low-income households, is favorable to singles as well. EITC is given to single-person households earning less than 22 million won per year and dual-income couples earning less than 38 million won.

The percentage of dual-income pairs who received the tax credit, 6.5 percent, was less than one-fourth of single-person households, at 27 percent, in 2019, according to National Assembly Research Service’s report released last year.

Such relative disadvantages are convincing newlyweds like Choi to stay legally single, at least until they have children because the number of children usually translates into more government benefits, such as merit points for a house subscription.

The government “may be jumping to the conclusion that dual-income couples are financially well-off just because they have multiple income sources,” said Choi Seul-ki, a professor of sociology at KDI School of Public Policy and Management.

“The scope of benefits should grow [for newlyweds] so that people who were economically active before marrying are not penalized for getting married,” Choi added.

“Policies that encourage people to delay marriages due to housing or tax issues should be subject to a reform.”

The percentage of dual-income marriages for couples in their 30s — when most Koreans walk down the aisle — stood at 53.3 percent in 2021, up 11.9 percentage points from 2011.

BY JEONG JIN-HO [sohn.dongjoo@joongang.co.kr]