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Why Seoul City Placed an 'Attachment' on Rental Housing Designed for Housing Stability

[비즈한국] Tenants in rental housing provided by the Seoul Metropolitan Government to address housing shortages for single-person households and young adults are now at risk of eviction. Recently, the Seoul Metropolitan Government filed a claim with the court for a real estate attachment worth 900 million KRW against the social housing operator, "Green Friends Co., Ltd.," because the company failed to repay the social investment funds it had borrowed from the city. The court accepted the request, and as of January 13, an attachment registration was placed on the Haeng-un Housing property in Gwanak-gu held by Green Friends.

Green Friends is a social enterprise that operates social housing in 13 locations across the Seoul metropolitan area, including Seongsan-dong in Mapo-gu and Changcheon-dong in Seodaemun-gu. Because it failed to repay approximately 925 million KRW in social investment funds and late interest borrowed from Seoul City in 2016 by the deadline, it now faces the risk of losing its third social housing project, Haeng-un Housing. Haeng-un Housing consists of 19 units, 18 of which are currently being operated as social housing.

A Seoul City official explained the background of the attachment, stating, "We applied for the real estate attachment as part of measures to preserve our claims. Green Friends continued to be in arrears without repaying the social investment funds borrowed from the city by the deadline."

At Haeng-un Housing in Gwanak-gu, a decision for a compulsory auction was already issued last November because Korea Social Investment had established a collateral mortgage for a maximum bond amount of 941.6 million KRW. Due to the attachment, exercising ownership rights such as selling or leasing is impossible, and the compulsory auction means that the 18 resident households are on the verge of being evicted overnight. The security deposit per unit at Haeng-un Housing ranges from 79.458 million KRW to 151.572 million KRW.

Social housing is low-cost rental housing created by the Seoul Metropolitan Government to resolve housing burdens for single-person households, young adults, newlyweds, and the elderly, and is operated by private entities. In the case of Haeng-un Housing in Gwanak-gu, it is a land-lease social housing project where the Seoul Housing & Communities Corporation (SH) owns the land, and Green Friends built and leases the building. There had been discussions about the need for guarantee insurance to protect tenants in such cases, but it has not yet been institutionalized.

Resident A of Haeng-un Housing, whom we met on the 15th, stated, "The residents are aware of the situation after receiving notices regarding the compulsory auction. We are waiting for Seoul City and Green Friends to come up with countermeasures."

The Seoul Metropolitan Government, which selects private operators for social housing, does not have any specific measures either. When BizHankook asked Seoul City about its countermeasures, the city only emphasized that it is not responsible for the occupancy contracts. A city official stated, "We are continuously demanding the fulfillment of obligations to ensure that residents do not suffer damages. We will try our best to normalize the operation of the social housing," while drawing a line by stating, "Seoul City has no legal responsibility for the rental deposits."

Green Friends, the operating entity, was selected as a pilot operator for Seoul's social housing in July 2015 and also operates rental housing purchased by organizations such as the Seoul Housing & Communities Corporation and the Korea Land and Housing Corporation. Critics point out that since there are concerns about its recent financial difficulties, more cases like Haeng-un Housing in Gwanak-gu could occur.

A Green Friends official told BizHankook, "Out of the approximately 925 million KRW borrowed from the Korea Social Investment Foundation, we have consistently repaid over 500 million KRW. We will repay a portion of the remaining 400 million KRW in debt and stop the auction process through measures like rescheduling repayments. We plan to alleviate the anxiety and concerns of the residents."