Korea Land and Housing Corporation (LH) is accelerating public housing supply by advancing construction schedules and increasing rental unit allocations as President Lee Jae-myung pushes aggressively to stabilize the real estate market.
The government believes sustained market stability requires swift delivery of new housing, having already curbed home price increases by suppressing buyer demand through loan regulations and heavier capital gains taxes on multiple-home owners. The administration plans to unveil structural reforms for LH soon to expedite housing supply.
According to the Ministry of Land, Infrastructure and Transport, LH plans to break ground on more than 95,000 units nationwide this year, including 86,000 in the capital region. Of these, 45,000 units are targeted for public land sites, including 17,000 in third-generation new towns.
In the first half, LH will start construction on 10,000 units—2,000 more than the previous year—to ease the year-end concentration of projects. For tenant recruitment, the corporation plans 62,000 units nationwide, including 42,000 in the capital region: 25,000 for-sale units, 7,000 construction-type rentals, and 10,000 purchased rentals.
Expanded Rental Supply and Quality Improvements
LH is increasing public rental housing volume while dramatically improving quality. Station-area public rental supply will rise from the originally planned 37,000 units to 53,000 units.
The corporation will boost mid-size rentals (60-85 square meters exclusive area) from the current 5% to over 10% this year to prevent concentration in smaller units. Private brands will be introduced to improve perceptions of rental apartments. LH will also expand pilot programs allowing residents to select preferred furniture brands and design options.
The government will support improved project viability through measures including higher floor area ratios. A revision to the Urban and Residential Environment Improvement Act providing floor area ratio incentives for public redevelopment and reconstruction projects awaits only final passage in the National Assembly.
Park Hap-su, professor at Konkuk University's Graduate School of Real Estate, said: "If we raise the floor area ratio for the third-generation new towns currently underway from around 200% to the 300-350% level applied to first-generation new town redevelopment projects, profitability will improve accordingly."
LH Spin-off Under Consideration
The government is pursuing a plan to spin off LH into separate entities—one handling development and housing supply, another managing residential welfare and asset management. This responds to criticism that LH's excessive debt burden of 170 trillion won has slowed housing delivery.
LH has approximately 200,000 units of construction-type public rental and public for-sale housing that received project approval between 2020 and 2025 but have not broken ground. Of these, 20,790 units remain unstarted more than three years after approval, and 10,636 units have been stalled for over five years.
Analysts attribute the growing backlog primarily to funding difficulties as LH's debt has increased, delaying land compensation and site preparation.
President Lee has emphasized that housing supply must support real estate market stabilization and signaled willingness to accelerate delivery through an LH spin-off. At the Ministry of Land's December briefing, he pointed to LH's debt ratio and said: "Technically, we can separate debt and assets for specialized management." At last month's senior secretary meeting, he urged: "Dragging things out too long is the same as not doing it at all. Pick up the pace."
If LH spins off, it would mark the first restructuring since Korea Land Corporation and Korea National Housing Corporation merged to form the current LH in October 2009 under the Lee Myung-bak administration—17 years ago.
Spin-off possibilities arose in 2021 after employee speculation scandals involving leaked new town information, and again in 2023 when the Incheon Geomdan apartment parking garage collapse exposed shoddy construction and underlying corruption. Neither led to actual separation.
Reform Details Expected This Month
Specific reorganization plans may emerge as early as this month. The leading scenario would divide LH into a housing supply agency (Land and Housing Development Corporation) and an organization focused on public rental operations and low-income residential welfare (Reserve Corporation).
LH has traditionally supplied housing by developing public land and selling it to private developers, but plans to conduct projects directly going forward. Given that excessive debt could burden direct development, the rental operations unit is expected to assume most of the debt.
LH's total debt currently stands at approximately 165 trillion won. Observers suggest the president's proposed reform becomes feasible if roughly 100 trillion won in public rental-related debt is separated out.
Professor Park said: "If the spin-off eases the debt burden and facilitates financing, project speed can increase. Currently, debt grows with each rental apartment built, but if LH develops and executes projects directly, viability will also improve."