200 Trillion Won in Public Funds Managed Opaquely... Will the Housing Fund Face External Oversight?

Cha Kyugeun Proposes Amendment to Fund Act

Metropolitan and Local Council Heads to Join Committee as Ex Officio Members

Mandatory Disclosure of Review and Decision-Making Minutes

Managing Transparently for Housing Stability

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A revision of the law is being promoted to manage the Housing and Urban Fund, which is operated at an annual scale of over 100 trillion won, in a more transparent manner. There have been persistent criticisms that due to the closed management by the Ministry of Land, Infrastructure and Transport and fiscal authorities, the key decision-making process is difficult to understand, essentially making external oversight impossible. As the Housing and Urban Fund is used as a core financial source for domestic housing policies, including the supply of rental housing, there is growing attention to the direction of future discussions. ▶ See The Asia Business Daily, August 12, page 6, 'Policy Loans Reaching 180 Trillion Won'

"Minutes Disclosure & Notice Obligations... Need for Governance Reflecting External Voices"

According to a compilation of The Asia Business Daily's coverage on August 14, Assemblyman Cha Kyugeun of the Innovation Party for the Fatherland is set to sponsor a partial amendment to the Housing and Urban Fund Act containing these details in the near future. The crux of the amendment is to mandate making the deliberation and decision-making process related to fund management public through minutes disclosed to institutions such as the National Assembly. Currently, preparing minutes is obligatory, but there is no duty to disclose them externally, so the specifics of the discussions have never been made public when determining how the fund is used.

Assemblyman Cha explained the background for proposing the amendment, stating, “Although the Housing and Urban Fund has significant impact on the housing lives of the people, a democratic decision-making structure has not been established and it relies on decisions from the Ministry of Land, Infrastructure and Transport.” He further explained, “We aim to reform the fund management system and introduce democratic governance through disclosure, contributing to stability in the public’s housing.”

Information about Didimdol loans displayed in front of a bank in Seoul. Yonhap News Agency

According to the proposal, when forming the committee to manage the fund, representatives from integrated councils of metropolitan and basic local governments will be included as ex officio members to reflect external opinions. Currently, the committee is chaired by the Minister of Land, Infrastructure and Transport, with two officials from the ministry serving as ex officio members. There have been continued complaints from local areas that the accessibility to the fund is low during housing welfare projects.

Another major change is the obligation to disclose minutes. The minutes are to be made public one year after the meeting. However, if it is deemed there may be harm to task performance or to the financial markets, the minutes would be disclosed after four years. Even then, if requested by the relevant standing committee, they must be submitted in a non-public manner.

The amendment proposal also includes forming a Fund Evaluation Committee or separate subcommittees. The Evaluation Committee is an organization that will review public rental housing and policy loan projects—areas where the Housing and Urban Fund is mainly used—as well as overall matters such as operational performance and accounting treatment. Members are to be appointed based on recommendations from external organizations related to housing welfare, urban policy, and the fund system. This is also aimed at reforming the current structure to reflect outside expert input.

An obligation to report to the National Assembly is also included in the law. Within six months after the close of the fiscal year, performance and results of fund operation, the degree of contribution to housing stability, and sustainability must be analyzed and submitted in the form of an annual report to the relevant standing committee in the National Assembly. For new large-scale projects involving significant funding, a pre-reporting process is also required. Notably, the proposal presents detailed indicators to assess the effectiveness of fund operation, such as changes in residential floor space and housing cost burden of beneficiary households, the share of public rental units by region, frequency of defects, and appropriateness of fund support per type of rental unit.

Yoo Wook, Chairman of the Dongcheon Foundation, remarked, “It is necessary to thoroughly assess whether the fund is being used according to its original objective of supporting housing stability, whether appropriate financial support is being provided to both consumers and suppliers, and what projects are being carried out for housing vulnerable groups, and to openly disclose such matters. But that is not currently being done.” He added, “In the past, there were suspicions that certain companies received concentrated funding, and to foster different social actors responsible for housing supply, the management system needs to be made more transparent.”

National Pooled Funds—Yet Few Individuals Hold the Reins

The Housing and Urban Fund has an annual income and expenditure scale of 108 trillion won (based on the 2026 plan), with total assets—including liabilities—estimated to exceed 240 trillion won at the end of 2026. Among the 68 government-managed funds, it is the fourth largest after the National Pension Fund, Public Capital Management Fund, and Foreign Exchange Stabilization Fund. Among project-specific funds with designated policy purposes, it is the largest.

The fund traces its roots to the Housing Construction Promotion Act, enacted in response to severe housing shortages during the rapid urbanization of the 1960s and 1970s, and the issuance of bonds by the Housing Bank. Officially launched as the National Housing Fund in 1981, it gained its current form, and in 2015, it was revamped as the Housing and Urban Fund, expanding its official responsibilities to urban regeneration. The fund is sourced from its own revenue streams such as recovered loans and interest income, as well as subscription savings paid by individuals and allocations from lottery funds. National Housing Bonds that are purchased for real estate registration or mortgage loans also make up a significant share. In essence, it is money contributed by the public.

In the case of the National Pension Fund, which is responsible for the retirement security of the population, the governance is structured to reflect the voices of diverse stakeholders from numerous sectors. In contrast, there has been ongoing criticism that the Housing and Urban Fund does not meet this standard. For instance, the National Pension Fund Operation Committee is chaired by the Minister of Health and Welfare and, in addition to ex officio government and public enterprise members, includes appointees from employer and labor organizations, agricultural, fisheries, and small business groups, and consumer organizations.

In contrast, for the Housing and Urban Fund, only officials from the Ministry of Land, Infrastructure and Transport and a handful of private experts are involved. Due to the closed nature of the system, with little obligation to disclose major decision-making documents and the relative lack of accessible public data, problematic decisions frequently come to light only long afterward. For example, last year the Ministry failed to execute about 97% of the direct policy loan disbursements it had originally planned—yet this decision became known only more than half a year later, through the National Assembly's closing accounts report.

Although the non-execution of budgeted funds can be allowed for specific reasons, it is rare for more than 90% of a budget to go unused—especially when compared to the standard practice of ministries managing budgets tightly, based on progress in quarterly or semiannual project execution. Concerns over depletion of surplus funds in the Housing and Urban Fund in 2024 and 2025 also arose abruptly, largely due to the introduction of a low-interest housing purchase loan program for households with newborns. At the time, it is said to have been pursued in response to the falling birthrate, without a medium- to long-term fiscal outlook.

Professor Park Jun of University of Seoul remarked, “Despite being a policy-driven fund, there was excessive emphasis on operational stability, which simply increased the share of funds for policy loans, fueling housing price increases and failing to meet its goal of stabilizing housing for ordinary people.” He continued, “Raising the proportion of interest support to offset differences between market and policy rates has also undermined the fund’s financial stability. In the interest of housing stability for ordinary people, the Housing and Urban Fund must actively play its role, and the current management and evaluation systems need to be fundamentally changed.”

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