WITH THE start of the 2014 spring semester, university students might have their own worries. They might be anxious about their new classes, new professors or simply studying for a good grade. However, for some students, what worries them most is simply finding a place to live. Some students are lucky enough to live in a school dormitory, but most have to rent a room near school at a high cost. To lessen the burden of university students’ housing problems, the government in 2012 made a new policy activated by the Korea Land & Housing Corporation (LH). Under this policy called University Students’ Subleasing Policy, the government rents a room from the property owner and subleases it back to the students to help students rent rooms at a much lower cost.
How can the policy help students?
In the Report of University Students’ Housing conducted by Minsnail Union, a student union aiming to improve living conditions for university students, it is clearly revealed why this policy was initiated. The average monthly rent paid by university students is about \430,000, which takes up about 45 % of the students’ total living expenses. This cost is quite expensive for university students to pay on their own, which is why half the respondents answered that their parents pay for their housing. Yoem Ji-eun (Jr., Dept. of Education, Yonsei Univ.), who rents a house in Sinchon, said that even though her parents pay her rent, she found it difficult to find a house with a reasonable cost so that her parents would not feel burdened. In addition, many students face other difficulties even after they have found a house with an affordable rent. When some homeowners make contracts with the students, they skip some important procedures, such as making a copy of the contract. A sophomore who asked for anonymity said that “I had some difficulties in making contract with the house owner, because he only wanted to make a verbal contract. I became worried that the owner might change the content of the contract by himself.” Still without a written contract, she worries about the possibility of being put in a disadvantaged position which may result in any difficulties later on. In other words, she might have trouble with the homeowner. Due to these problems, it often takes a lot of effort and time for the university students to search for the affordable house and to finally make the contract. To solve these kinds of problems, the LH has been helping these university students with its new University Students’ Subleasing Policy.
The main goal of this policy is to help students rent housing at a lower cost. To elaborate, the LH rents a house from the homeowner through jeonse* and then rents the same house out to the students at a much lower cost through weolse**. The process goes as follows: First, the LH decides how many houses they will rent to students in each city. For 2014, as an example, the LH decided to rent 3,000 houses nationwide and allotted 1,100 houses to Seoul. Then, LH selects students who will receive the support. Students from the universities that LH designated can apply by turning in some documents, such as the application, a copy of their Resident Registration or a university enrollment certificate. If the students want to live with specific other students, they can apply for this policy as a team of two or three students. Then, LH selects students, taking into consideration their financial situations. They divide the applicants into three groups and give priority to the students in difficult financial circumstances. – Students who have first priority are recipients of national basic livelihood, which is a social security program provided by the government to help those with low income carry out their basic living. Second priority is given to the students whose family income is less than 50% of the national average, while upper income students receive lower priority. Students who do not have first or second priority are classified as a student who has third priority. After the students are chosen, the selected students are asked to seek through local real estate agencies. The houses they choose must fit into several requirements that meet the LH criteria. After the house that the student chooses is approved by the LH, LH rents the house through jeonse, (about \75 million at a most) and then, rents it out to the students through weolse for two years. After the contract expires, students can renew the contract up to two times.
This policy is expected to greatly reduce the burden of students when they look for housing. Most of all, using this policy, students can save much money for their house rent. For the students classified as first priority, monthly house rents are about \70,000. Students classified as third priority have to pay about \180,000 monthly in rent, much lower than the common rents in neighborhoods near universities in the range \300,000~\500,000. Also, the students do not have to worry about the credibility or strength of the contract since it is guaranteed in writing by the LH. Kim Ye-joo (Soph., Russian Lit. & Language, Seoul National Univ.), who has been living in a house under the university students’ subleasing policy, said “I think this policy helps the students who cannot afford much money pay for the expensive house rent.” She added that she is thankful to the LH because it helped her save her money.
What’s the matter?
Even though this policy is helping students, it still has several shortcomings. First of all, there are far more student applicants than the number of subsidized rental houses that the LH provides. Last year, the LH provided about 3,000 houses nationwide, while about 14,000 students applied more than 4 times the total number houses that LH supported. In Busan, the number of allotted houses was even smaller than the number of applicants of first priority. This situation, however, did not improve this year, as the number of applicants still remains above four times bigger than the number of the provided houses. Ironically, this policy also has a problem in that the majority of the students clearly do not know about this policy. Even though the LH has been supporting students since 2012, still, a large portion of university students remain unaware of this policy. Kim Ye-joo confessed that she found out about the program only because one of her acquaintances suggested that she apply.
The biggest problem arises when the chosen students look for housing. Students face many difficulties when searching for the house that meets the requirements of the LH’s policy. First of all, the house should be under 50m2 and must be able to be rented through jeonse. Also, the debt ratio of the house – the ratio of debt to the estimate market value of the property – should be under 90%. However, this 90% debt ratio is considered to be quite difficult to be met for many house owners, due to high real estate prices nationwide, especially in Seoul. Kim explained, “As for me, it was pretty hard to find a house that fits into the requirements by LH because most of the houses had the debt rate of over 90%.” Another requirement is that the houses should be classified as “residential houses.” However, most of the houses near universities, such as go-si-won, a low-cost lodging facility with exceptionally small rooms are usually classified as a “neighborhood facilities.” Therefore, students living in certain kinds of housing have to forego support by LH even though they are initially selected as an eligible recipient. Kim added that due to the strict requirements, many people may have to spend a lot of time searching for the right house.
Owners of rental properties are also making complains about this policy, especially since are obligated to enter into contracts with both the LH and the students. Therefore, Unlike the students, the house owners might often be reluctant to accept this policy. According to Roh Hwang-yong, who rented out his house to a student using this policy in Incheon, he had to agree to numerous contracts which were in a process that he found very annoying and time consuming and for no substantial benefit. “As of now, most of the house owners just rent out their houses to the students simply out of sympathy,” Roh said. He also pointed out another problem: the students obtaining housing with LH assistance under University Students’ Subleasing Policy tend to be less responsible about the maintenance of their houses since they usually think that they made a contract with LH, not with the house owner. Roh added, “When I rented out my house to some students through this policy, the students who rented my house were very rude and irresponsible about using the house.”
` Furthermore, it is being pointed out that the policy is actually fueling a more expensive rental market. Since the LH decided to support about \750 million per house to the students, some property owners started to raise rents to approach \750 million. The Minsnail Union report mentioned earlier found that some landlords have even colluded to set higher rents on houses that were previously rented out for much less money. As a result, the students who do not benefit from the new subleasing program are harmed by the general climate of increasing house rents.
How to solve the problem
To solve these problems, the most important improvement that must be made centers on the policy itself. First of all, the LH should expand the program to provide more affordable student housing. As of now, many students cannot afford to pay the average renton the open market can benefit from this policy, since 3,000 houses are small in number compared to the overall number of students who need housing. Second, LH should also lessen the students’ burden in searching for a house by relaxing the numerous and strict requirements. As Kim Ye-joo said, the requirements of the houses made by LH seem to be needlessly strict and far off from the current dynamics of the housing market near universities. It would be better if LH changes some of its requirements of the houses. Kim made another suggestion, “I think it would be much easier for the students to look for the reasonable houses if LH provides several lists of the houses that meet the requirements, and that students can apply for.” If the policy is improved, accordingly, more students will be able to receive benefits and the selected will be able to lessen their worries about finding housing. Additionally, it seems that incentives and benefits for property owners need to be more clearly established.
Students not selected for the program by LH also need alternative sources of assistance. Jip-bo-saem hui-mang-sa-up, a newly launched service by Solution, the current Students’ Union of Yonsei, aims to increase the residential rights of the students. This service helps students from rural areas find affordable housing. When the students notify the conditions of the house they are looking for, this service finds the house that fits in to the requirements. By providing free counseling regarding any residential problem, this service helps prevent Yonseians from being placed in a disadvantageous position when making a rental contract with the house owner. Seo Chae-ri, (President, Dept. of External Affairs, Solution) said, “We are planning to provide fundamental solutions to solve various residential problems that many Yonseians are facing.”
Moreover, some dormitories that are currently being built by the government, including one new facility in Seodaemun-gu scheduled to open in August of this year will help ease student housing problems. In Seodaemun-gu, there will be a hui-mang dormitory which would be allotted to the students at an inexpensive cost, aiming to improve the resident stability of university students. This new dormitory will be rented out for the selected students from rural areas as well as students in financial difficulty. The dormitory will hold about 520 students from the universities in Seodaemun-gu, and the housing cost would be much cheaper than the average rents in Seoul.
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LH is surely helping many students rent houses at a reasonable cost. However, even though the policy aims for lessening burdens faced by students, it has some critical shortcomings that make it difficult for many students to benefit fully. It is not only the lack of sufficient housing that LH provides but also the strict requirements that generate a discrepancy between the original purpose of the policy and the actual effects. LH and the government should listen to these complaints carefully, and improve the policy so in order to help as many university students as it can.
*Jeonse:To rent a house through jeonse, tenants should hand over a large sum of money to the property owner at once, upon moving into the property, instead of paying a monthly rental fee. When the contract expires and the tenant moves out, the house owner should pay back this money to the tenant.
**Weolse:To rent a house through weolse, tenants should pay a relatively small amount of money as a deposit to the property owner and then pay monthly rent. In this case, the owner keeps the monthly rental payments and pays back the deposit when the tenant moves out.