S. Korean Realtors say Army's plan for off-base housing will hurt business
YONGSAN GARRISON, South Korea — Some of the Realtors clustered around U.S. bases in South Korea said the Army’s new plan for finding its soldiers off-base housing could put them out of business and might result in poor landlord service.
But the Army says its new program will save about $25 million per year and will eliminate time-consuming monthly rental payments for soldiers.
Local Realtors depend on the steady stream of troops and civilians seeking apartments because of a lack of on-base housing. They say that revenue could dry up under the Army’s plan to use a single contractor to negotiate rents for personnel living off base.
Some Realtors said Tuesday that they were not informed of the changes; some said the new procedure could put them out of business.
“The new system is going to affect my business greatly,” said Park Kyong-pae of L.A. Realty, who said 95 percent of his business comes from the base.
The Realtors likely will be briefed after details are finalized with a potential contractor, said Bud Rader, chief of the quality management branch plans division for the Installation Management Agency-Korea (IMA-KORO).
For its new system, the Army will contract a South Korean company to find apartments and, more important, 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 still will be much cheaper — an average of 30 percent, up to 50 percent in some cases — than the rent soldiers and civilians pay now, officials said.
Officials also told Stars and Stripes the plan is better for soldiers because they no longer will 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.
Officials said the Army would see fewer problems with people losing money, or gambling away rent money in slot machines.
More than 3,100 soldiers and civilians live off base in the Seoul area, paying monthly rent, housing officials say.
Army officials said they initiated a “fair market value housing program” to stop landlords from gouging residents by automatically charging them the maximum they were authorized with their housing allowance. In Seoul, space is at a premium, apartments often run thousands of dollars a month. The program limited the amount of money the Army would pay for an apartment based on size and condition.
The sudden change will hurt soldiers and property owners, Park said. Realtors compete to provide good service to soldiers, and a single property management company would have a monopoly on business and, therefore, less incentive for good service, Park said.
Katherine Kim, an agent with Prime Realty, doesn’t think local landlords will want to use the new system because it means they will make less money.
About 24 Realtors are now approved to work with base personnel, military officials say.