The Seoul Metropolitan Government has been operating the rent subsidy program to support the poor bearing housing expenditure only on its own budget since 2002. This program was renamed as Seoul Housing Voucher Program in 2010, with its program target extending to housing-disadvantaged class. In June, 2011 5.3 thousand households were being subsidized by the government and the amount of the subsidy per household ranged from 43,000 won to 65,000 won every month.
In the decade of the 2000s there was a very clear change that Korean unique type of housing lease, Jeonsei decreased and monthly rent contracts with security deposit reversely increased. Especially, after the global financial crisis in 2008, stable housing prices and low
interest rates led to the rapid change from Jeonsei to monthly rent contracts with security deposit. The number of the rent poor, who usually pay more than 25 percent of their income as their rents, are expected to grow consistently.
The purpose of this study is to propose how to improve the operation of the rent subsidy program of the Seoul Metropolitan Government and how to develop it from a strategic and long-term perspective.
The suggestions for the improvement on its operation are followed as:
First, the program target extends to households whose adjusted incomes are 150 percent of the minimum cost of living and less in order to mitigate some burden on the poor of housing expenditure.
Second, taking 25 percent of the rent-to-income ratio(RIR) into account, the level of subsidy for each household is set as high as 66,000 won for single-person or two-person household, 104,000 won for three-person or four-person household and 142,000 won for
five-person or more household.
Third, the subsidy is paid to tenants to ensure their privacy protection and self-responsibility and so on.
Fourth, the limit of the rent-converted security deposit value is set at 60 million won for single-person or two-person household, at 75 million won for three-person or four-person household and at 90 million won for five-person or more household.
Fifth, by combining the rent subsidy program with some self-sufficiency programs of Seoul and the central government, the development of the strategy is promoted to assist participants in the housing voucher program to become self-sufficient, that is, not dependent on welfare assistance. The system for supporting families in housing-poverty is established in this regard, hence the partnership is developed among housing welfare agents including Housing Welfare Service Centers and SH Corporation, centering around local community service centers.
The suggestions for the strategic and long-term scheme to develop the rent subsidy program are followed as:
First, the program needs to serve as income support, so its target should be confined to the poor until the number of public rental housing reaches 10 percent of total housing stock in Seoul.
Second, the recipients of rent subsidies from this program gradually need to increase until 2020 considering the program demand of about 30 thousand households. To achieve this, Seoul necessarily tries to accumulate lots of funds in the Housing Supporting Account of the Social Welfare Fund by paying in the account some amount ranging from 10 billion won to 20 billion won every year.
Third, in terms of the implementation of the nationwide housing voucher program the Seoul Metropolitan Government ought to provide advice and cooperation for the central government. Seoul also needs to develop its own rent subsidy program to improve the housing quality and to cope with the fuel poverty.