Surging Interest in Remodeling: Will It Benefit from Stricter Reconstruction Regulations?

Reconstruction Safety Inspections and Move-in Rights Threshold Raised by 6·17 Measures
Remodeling Allows Cost Reduction with Shorter Construction Period and 15-Year Standard Age
Concerns Over Regulation Target if Housing Prices Rise Amid Remodeling Project Expectations
Undecided Load-Bearing Wall Demolition Also a Hurdle... "Decision Expected in June-July"

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#Mr. A, who lives in a remodeling complex in Gongdeok-dong, Mapo-gu, Seoul, has become deeply concerned. He had planned to gather his funds and move to a reconstruction complex in the Gangnam area, but the government's June 17 real estate measures have tightened reconstruction regulations. Moreover, there are talks around him that this measure might actually be a boon for remodeling complexes.

According to the real estate industry on the 19th, with the June 17 measures strengthening reconstruction regulations in speculative overheated districts such as Seoul, expectations for the ripple benefits among remodeling complexes are growing. Remodeling refers to extending the lifespan of old and aging apartments through expansion, improvement, or major repairs. Unlike reconstruction, which involves demolishing the entire apartment and rebuilding, remodeling is carried out while retaining the building's framework, resulting in a relatively shorter construction period and reduced costs. The standard age for remodeling is 15 years, about half that of reconstruction, and projects can proceed even with high floor area ratios, making it an attractive alternative for complexes where reconstruction is difficult due to profitability issues.

Remodeling is subject to the Housing Act rather than the Urban and Residential Environment Improvement Act, which applies to reconstruction, so it faces fewer regulations. Reconstruction projects have seen significantly raised hurdles under the new measures, such as stricter safety inspections at the initial stage and granting occupancy rights only to union members who have lived in the property for more than two years. The implementation of the excess profit recovery system, which requires paying back hundreds of millions of won, is also problematic. This is why there is a forecast that more complexes will turn their attention to remodeling.

In fact, even within remodeling complexes in Seoul and the metropolitan area, there are responses that the policy is a positive development. Currently, more than 50 remodeling complexes that have passed the stage of establishing promotion committees are known, including Hyundai Mansion in Ichon-dong, Yongsan-gu; Geukdong Apartment in Oksu-dong, Seongdong-gu; and Namsan Town in Jung-gu. A representative from the remodeling promotion committee of B Apartment in Guro-gu said, "There have been difficulties in the project due to voices among some residents advocating reconstruction, but this measure is expected to increase preference for remodeling."

Construction companies, which have been hampered by sluggish reconstruction projects, are also expected to actively expand into the remodeling market. Large construction companies such as Hyundai Engineering & Construction, Daelim Industrial, and Lotte Construction have shown interest in the remodeling project briefing session scheduled for the 27th at Byeoksan Apartment in Geumho-dong, Seongdong-gu. Byeoksan Apartment is a large complex with 1,707 households and is evaluated to have excellent location conditions.

However, there are concerns that if housing prices rise due to expectations of project promotion in remodeling complexes, they could become targets of government regulation. A representative from the remodeling promotion committee of C Apartment in Songpa-gu said, "If we do not quickly obtain owners' consent and proceed during this period, there is concern that remodeling standard age regulations might be changed and regulations strengthened."

Another obstacle to remodeling projects is the unresolved issue of whether to allow the demolition of load-bearing walls for vertical extension, which has not been decided for several years. Whether load-bearing wall demolition is permitted is directly related to diversifying floor plans and has a decisive impact on profitability. Currently, all seven pilot projects selected by Seoul City as 'Seoul-type Remodeling' have chosen vertical extension and are awaiting the results of research studies. Han Seung-heon, president of the Korea Institute of Civil Engineering and Building Technology, said, "(The safety research on load-bearing wall demolition) experiments are scheduled to be completed between June and July," adding, "After reporting to the Ministry of Land, Infrastructure and Transport, the related details will be disclosed."

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