[2026 National Assembly Audit] "LH Split: Who Will Take on the Debt?" Ruling and Opposition Parties Criticize Financial Burden, Staff Shortages

Debt Allocation After LH Split Under Scrutiny
Concerns Also Raised Over Staff Shortages for Housing Supply
Expansion of Rental Housing Also Cited as a Financial Burden
Ruling and Opposition Parties Criticize Remarks on Tighter Lending Rules

Ruling and opposition parties jointly voiced concerns at a National Assembly Land, Infrastructure and Transport Committee audit on October 12 over Korea Land and Housing Corporation (LH)'s rising debt and the effectiveness of a plan to split up the organization. Lawmakers warned that the split could worsen LH's financial structure if it goes ahead without a discussion on how to allocate its existing debt. They also raised concerns about staff shortages as housing supply expands.

LH Debt Forecast to Reach 372 Trillion Won by 2030... "Construction Costs and Supply Volumes Rising"

Yoo Sang-beom of the People Power Party cited LH's mid- to long-term financial management plan, saying, "LH's debt will surge from 197 trillion won this year to 372 trillion won in 2030, four years from now."

Lee Seong-hun, president of the Korea Land and Housing Corporation, listens to lawmakers’ questions with his head in his hands during a parliamentary audit of the Korea Land and Housing Corporation and other institutions at the National Assembly on the 12th. Photo by Yoon Dong-ju

He also criticized LH for rapidly accumulating debt as it shifts from selling housing sites to directly developing them. Previously, LH used proceeds from land sales to cover losses from its rental housing business, but the shift to direct development has weakened this revenue structure, he said.

"LH's debt is surging as it shifts to direct development, and operating losses are piling up, with its interest coverage ratio falling into negative territory. It is effectively no different from a 'zombie company,'" Yoo said. "Promising to supply 940,000 rental housing units under these circumstances is tantamount to letting its debt snowball."

In response, LH President Lee Seong-hun said its financial burden had increased because supply volumes, including those in the latest third-phase new towns, had risen sharply and construction costs had gone up. "There are compensation and construction volumes for the third-phase new towns and those designated afterward. Debt has increased somewhat in the process of rapidly expanding supply," Lee said. He added, "Construction costs have risen by nearly 50% over the past few years, leaving little profit even when we carry out development projects. Debt is currently growing rapidly, and recovery is slow, so we are asking the government for financial support."

Responding to Yoo's claim that rental housing supply was increasing LH's debt, Lee said, "Although the volume of rental housing is growing, a considerable portion consists of general-type rentals, for which rents are set at levels close to market rates." He added, "We incurred losses because we had a large volume of rentals for low-income households, with rents at 20-30% of market rates. Going forward, however, a considerable portion will be general-type rentals, which will help improve our financial structure."

How to Handle Debt After LH Split Emerges as Key Issue; Concerns Also Raised About Staffing for Housing Supply

How to allocate debt after LH is split up has also emerged as a key issue. The government is pursuing a plan to divide LH into one agency responsible for housing-site development and another responsible for land banking. However, critics say no specific alternative has been drawn up for allocating losses from the rental housing business and existing debt.

Lee Seonghun, president of Korea Land and Housing Corporation, answers lawmakers’ questions during a parliamentary audit of the Korea Housing Corporation and other institutions at the National Assembly on the 12th. Photo by Yoon Dongju

"LH's losses from its rental housing business rose 53% in five years, from 1.79 trillion won in 2021 to 2.73 trillion won last year," said Yeom Tae-young of the Democratic Party of Korea. "After LH is split up, the rental housing business is expected to be handled by the entity responsible for housing welfare, but a plan is needed for dealing with the increased losses and existing debt."

Lee said, "We are internally reviewing how to operate the two agencies going forward. We still need to work out the details in consultation with the Ministry of Land, Infrastructure and Transport."

Lawmakers also pointed out that staffing was declining even as the volume of housing supply assigned to LH was increasing. Yeom called for a specific staffing expansion plan, saying, "Compared with 2020, when LH was tasked with supplying 60,000 units, the target has risen to 110,000, but the number of employees has actually fallen." Lee said, "We need to hire both temporary and permanent employees," adding that LH was consulting with the Ministry of Land, Infrastructure and Transport and other government agencies.

Lee also faced mounting criticism over remarks on mortgage lending restrictions. At a recent press briefing, he said that the 600 million won mortgage loan limit for homes priced at 1.5 billion won or less should be tightened further.

"How is it any different from kicking away the housing ladder for people without homes when the head of LH, which is responsible for housing supply, calls for tighter lending?" said Eom Tae-young of the People Power Party. Jeong Il-young of the Democratic Party of Korea added, "Young people and actual homebuyers are highly dissatisfied with those restrictions. We need to speed up supply, not curb demand. That is not something the head of LH should be saying."

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