[Taemin Ryu's Real Estate A to Z] Is It Advantageous to Change Saengsuk to Officetel Use?

Temporary Use Change to Officetel Allowed for 2 Years
Saengsuk Not Included in Housing Count but Penalty Risk if Used Residentially
Consider Rental Income and Liquidity

Seoul Gwanghwamun nearby officetel dense area. (Photo by Yonhap News)

[Asia Economy Reporter Ryu Tae-min] The government has temporarily eased building standards to allow lifestyle lodging facilities (Saengsuk) to be converted into officetels over the next two years, causing growing concerns among owners. Saengsuk facilities have often been used illegally as actual residences without changing their designated use to take advantage of the fact that they are not counted as housing units. However, the Ministry of Land, Infrastructure and Transport, the main authority, has announced it will crack down on illegal use after a grace period.

Lifestyle lodging facilities were introduced in 2012 as accommodations for long-term stays. Although similar to officetels, they fall under lodging businesses regulated by the Public Health Control Act and cannot be used as residential housing. They can only be operated as lodging businesses through business registration.

Saengsuk has recently gained popularity in the subscription market because it is not included in the housing count, thus exempting owners from acquisition tax and capital gains tax surcharges applied to multi-homeowners. Additionally, since no subscription savings account is required at the time of sale and there are no restrictions such as resale limitations, it has surged as a niche investment product.

However, experts advise considering conversion to officetels depending on location and environment. Unless owning multiple high-priced homes, the tax burden difference is not significant, so other factors such as rental income and liquidity should also be considered. Song Seung-hyun, CEO of City and Economy, said, “Saengsuk can only be operated as lodging facilities through a management company, making rental income less favorable compared to officetels,” adding, “Unless the building is located in a resort or tourist area, it is better to convert to officetels, which have a more diverse demand base, to seek rental income.”

Although popular in the subscription market, Saengsuk is not favored in the investment market, making it difficult to expect capital gains through future asset value appreciation. CEO Song advised, “The Saengsuk premium formed due to regulatory balloon effects can disappear at any time, so it is necessary to reduce uncertainty by converting to officetels with higher liquidity.”

Concerns about risks related to illegal use have also been raised. Yoon Ji-hae, Senior Researcher at Real Estate R114, said, “If used illegally for residential purposes, there is a high risk of fines later,” advising, “For genuine users intending to live in them, it is advantageous to convert when possible despite the tax burden.”

This content was produced with the assistance of AI translation services.