YONGSAN GARRISON, South Korea — The U.S. Army said it will save nearly $25 million yearly by changing its process for renting off-base apartments.

The proposed change is based on a traditional South Korean system called “wolsae” in which people lower monthly rental costs by providing landlords substantial deposits, usually 70 percent of the apartment’s value.

In Seoul, where property values soar into hundreds of thousands of dollars for apartments, that means renters borrow money from banks or family. The landlords earn money by investing the deposit but must return it in full at the end of the contract.

For its new system, the Army will contract a South Korean company to find apartments and, more importantly, pay the landlord deposits with money it borrows from local banks.

In return, the military will pay the interest on the deposit, about 6 percent, and a yet-to-be-determined fee to the management company, as rent.

The interest rates and fee will still be much cheaper — up to 50 percent in some cases — than the rent soldiers and civilians pay now, officials said.

About 4,000 servicemembers and civilians live off base in South Korea, with nearly 3,150 of those living in Seoul, said Daniel Myung, who works in cost management for the Installation Management Agency — Korea Regional Office. They spend about $100 million yearly in living quarters and overseas housing allowances.

Studies show 90 percent of the Yongsan-area landlords use an American-style system with residents paying monthly rent; 10 percent use wolsae. In outlying areas, it’s the opposite: 90 percent use wolsae and 10 percent prefer the American system.

The Army believes it still can find quality apartments and landlords willing to rent to people affiliated with the Army base under the new system, Myung said.

“We are talking about a very powerful customer in this market,” Myung said. “We play a big [role].”

The new system — set to begin later this year — will make it easier for soldiers to live off base, officials said.

Soldiers will no longer be required to withdraw living quarters allowance from their banking accounts, exchange dollars for won and stand in line to pay rent at off-base realtors. Instead, the finance command will transfer the funds directly to the management company.

Myung said the Army would see fewer problems with people losing money, or gambling rent money in slot machines.

“We do all the conversations, all the payments, all the collections,” said Bud Rader, chief of the quality management branch plans division for IMA-KORO.

“The employee picks the apartment he wants, lives in it and goes home.”

Most civilians now pay their rent one or two years in advance after requesting a lump sum housing payment. Under the new plan, the Defense Finance and Accounting Service would deposit a monthly housing allowance payment into an 8th Army account; 8th Army will then transfer it to the property management company.

Myung said the Army has experienced problems with landlords refusing to return advance rent when civilians were required to transfer early. This system, he said, will prove less of a risk.

Myung isn’t concerned about landlords not returning the deposits under the new system because it won’t be the Army’s responsibility.

The Army will deal only with the property management company, he said.

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