10 Percent of Sale Price to Be Prepaid on Subscribing to House Lottery

`Deposit for subscription system` is likely to be introduced to prevent overheated subscriptions on the lottery for the newly planned apartments.

The Ministry of Construction and Transportation (MCT) announced on the 29th that it is discussing the introduction of `deposit for subscription system`, which the Korea Housing Institute (KSI) proposed to protect end users of apartments and to prevent speculations resulting from thoughtless subscriptions.

In the subscription deposit system, the subscriber prepays a part of the house sale price (10 percent as a rule) on subscribing, and then transfers it to an initial payment after winning. The money will be returned when the subscriber is cut, and interest by fixed deposit rate according to the deposit time will be paid to both winner and loser in the lottery.

Current subscription system for apartments enables anyone who has an account for subscription with a minimum amount of 3 million won to subscribe apartments, whose sizes differ by the amount of deposited money. Therefore, `real estate agencies` that illegally purchase the subscription accounts as well as the subscription account holders can apply for subscription and make a profit by selling the rights with premium when they win the subscription.

Dr. Zchang Sung-Soo of KHI said, "End users are not burdened by the deposit money as they should prepare a contract deposit anyways. But the subscriber intending to speculate needs millions of won just to subscribe, which decrease the `speculative demands` ."

Jung Sang-Ho, head of Housing Management Division in MCT said, "We are discussing the introduction of the deposit for subscription system, but it is just one of the measures to improve the subscription system, as it may shrink the subscription market by forcing a sizabal sum of money to be prepared regardless of winning."

bonhong@donga.com