KNHC Should Release Rental Apartment Cost Data

The Korea National Housing Corporation (KNHC) announced that it would make public the construction cost of condominiums yesterday. This has led the residents of apartments first rented then sold to request cost data for their apartments as well.

Since private construction companies, whose construction costs will be released indirectly, are raising considerable opposition to the plan, the aftereffects of the release of cost data seem likely to expand.

“Costs of rental apartment ought to be released, too”-

The KNHC will make public costs of 73,700 apartments in 88 complexes, all of which are condominiums supplied over five years from 2002 to 2006. It excludes public rental apartments that are rented for 5 or 10 years before being put on sale from the list of apartments for the cost data release.

This is why the residents of public rental apartments are requesting the release of the sales cost data of their houses, saying, “We are paying too much money.”

Lawyer Kim Seong-hun, the attorney in the lawsuit raised by the residents of rental apartments in Deokjeong, Yangju-si, Gyeonggi-do, argued that, “Residents should be aware of whether the construction cost is legitimate because they have prior rights when the apartments are switched over for sales.”

In response, the KNHC argued, “It is difficult to make public the construction costs of all the public rental apartments because the sales price of condominiums and public rental houses are defined differently.”

The sales price of a public rental apartment is the sum of the price of the house at the time of the rental announcement and the assessed price at the time of switchover for sales divided by two. Because the price of the house at the time of rental announcement actually is an estimate of the construction cost in the future, making it public is a different matter from regular cost release data.

Private construction companies nervous-

Private construction companies raised massive objections to the KNHC’s plan to release the sales price data, saying, “The public sector has added pressure to the private sector when the private sector is already having hardships caused by price ceilings.”

Because the construction costs to be released by the KNHC consist only of the original cost excluding profit, they can function as indicators for estimating the construction costs in private companies. As this can trigger demands for the release of cost data of private apartments, private firms are getting nervous.