A means of protection from natural disasters and a source of comfort and well-being, shelter is, along with food and clothing, one of humankind’s most important basic needs for survival. Considering the importance of stable housing for life, its provision constitutes, to some degree, a public good. Just as public demand for welfare is increasing as a result of a rapidly aging population and slowing economic growth, so the public demand for housing welfare is growing accordingly.

    The government’s housing welfare policies have been characterized by a supply-oriented expansion of the quantity of housing, and the government has implemented both housing assistance and welfare programs dually. As a result, some beneficiaries have been selected twice while others have simply been left out. Moreover, in some cases, the level of support to meet recipient needs is insufficient, and some potential beneficiaries have been deemed ineligible or their support has been discontinued. Such problems have raised concerns about the equity and efficiency of the programs.

    The government has implemented a wide range of housing welfare policies. Alternative policy measures have been proposed by the new administration, including the supply of public rental housing, financing of jeonse (lump-sum rental deposits) loans at low interest rates, provision of housing benefits, and expansion of the rental subsidy program (housing vouchers). In view of effective policy implementation, this paper reviews the government’s current housing welfare policies to assess whether they have been established and implemented appropriately for enhancement of the public housing welfare and to make alternative suggestions for improving the policies in the future.

    Housing welfare programs are public policies to build and supply housing, subsidize rent and rental deposits, and financially support home improvements, thus ensuring a pleasant living environment for all citizens. The current housing welfare programs in Korea largely consist of supply-side programs, demand-side programs, and home improvement programs. Supply-side programs deal with the allocation of public rental housing and the sale of public housing. Demand-side programs include housing loans and financing of lump-sum rental deposits, housing benefits paid out as part of the basic livelihood benefit scheme, and housing vouchers and other rent subsidy schemes that the government aims to implement from October 2014. Home improvement programs include the energy efficiency program for low-income households administered by the Ministry of Trade, Industry & Energy, the slate support program of the Ministry of Environment, and subsidies for refurbishing rural homes granted by the Ministry of Agriculture, Food and Rural Affairs.

    The findings of this paper can be summarized as follows: First, the government must clearly define the categories of housing welfare recipients. The programs currently target specific income groups, which were found to be mainly those in the fourth income quintile or lower. Some recent models propose that the main beneficiaries should be households with income not exceeding 150 percent of the minimum living costs. To ensure that housing welfare policies are implemented efficiently within the limited financial means and resources, the government should clearly define which income groups to prioritize.

    The second finding is that housing assistance funds is paid out as part of the basic livelihood benefit scheme, and thus does not clearly stand out as housing benefits. The integration of housing benefits into livelihood benefits means that, whatever the housing need and type of housing (owned or rented), anyone eligible for basic livelihood benefits is automatically entitled to housing benefits, while those who are not included in the basic livelihood scheme are ineligible for housing benefits, even if they need them. Also, because housing assistance is paid out as part of livelihood benefits, their use is not restricted to housing expenses. So, in practice, they are no different from income subsidies.   

    Third, the period for the housing voucher pilot program must be extended and the schedule for implementation of the program must be adjusted. The government earmarked KRW23.6 billion for the pilot program, which is scheduled to be rolled out for three months–from July to September, 2014. However, a smooth implementation of the housing voucher program requires an efficient service delivery system and sufficient funding. Therefore, the government should extend the pilot period from three to six months to allow enough time to test its effectiveness. Moreover, the government should consider delaying the transition to a tailored benefit regime by three months so that it can be implemented from the new fiscal year of 2015.   

    Fourth, the unit price of the Happy Housing must be adjusted to realistic levels and the scope of the program must be modified. Not only is the government’s Happy Housing program faced with opposition from local residents and the self-governing body in the areas selected for the program, the program is not supported by a suitable financial plan. Though the program requires cooperation from the self-governing body and local residents, the government hasn’t yet organized presentation meetings or public hearings due to opposition from residents who would be impacted. Despite concerns that the per household unit cost of construction would rise to levels exceeding those of public rental housing due to the cost of building artificial decks on formerly railway land, the government has not reflected the additional cost in its 2014 budget proposal. Thus, the actual per household construction cost and the program size must be closely reviewed during examination of the government’s budget proposal.

    Fifth, home improvement programs must be consolidated and properly coordinated. Many are implemented by different ministries under different names, resulting in overlapping and a lack of interface between them. Moreover, the sporadic nature of the programs means that some homes needing urgent improvement fail to be repaired fully because the amount of subsidy is insufficient, while in other cases, less urgent repairs are made so that the entire amount of the subsidy can be spent. Examination of how home improvement programs are delivered shows that even though the ministries implement their program on their own, in the end it is the relevant self-governing bodies that receive and review applications, and make the recommended selection. Therefore, it is advised that self-governing bodies, which best understand the home improvements needed, be granted the right to administer the budget. Also, the home improvement programs independently organized by ministries should be gradually consolidated so that the program subsidies can be scaled up and the issue of keeping home improvements within the pre-determined subsidy limits can be resolved.