Hong Nam-ki: "Reconstruction applies only to those who willingly participate... No additional incentives for union members"

Housing Supply Expansion TF Meeting Briefing
Minister of Land, Infrastructure and Transport Kim Hyun-mi: "By 2025, 25% of all rental households will reside in public rental housing"

[Image source=Yonhap News]

[Asia Economy Reporter Jang Sehee] Hong Nam-ki, Deputy Prime Minister for Economy and Minister of Strategy and Finance, said on the 4th, "Reconstruction only applies to places where the association members willingly participate."

Deputy Prime Minister Hong stated this during a briefing at the Government Seoul Office on the same day at the briefing of the government-wide task force (TF) meeting on expanding housing supply, saying, "If the association members do not agree, the existing method should be applied."

The government has decided to newly supply 132,000 housing units in the Seoul metropolitan area and other parts of the metropolitan area. Public idle land, including the Tae-neung Golf Course, a military golf course, the Seoul Regional Public Procurement Service in Seocho-gu, and the Seoul Regional Headquarters of the Korea Land and Housing Corporation (LH) in Gangnam-gu, will be developed into public housing sites to supply 33,000 households.

The supply scale of the Yongsan Maintenance Depot in Seoul, which was previously announced as 8,000 households, will also be increased to 10,000 households, and an additional 4,000 housing units will be supplied through high-density development on project sites planned for complex development. The pre-sale volume of the 3rd new town, which was scheduled to be around 30,000 households, will be doubled to 60,000 households.

The following is a Q&A with Deputy Prime Minister Hong, Minister of Land, Infrastructure and Transport Kim Hyun-mi, and Acting Mayor of Seoul Seo Jeong-hyeop.

▲Regarding reconstruction, if private companies refuse to participate, are there any means to induce or force participation? Are there plans to provide incentives to private companies and association members?

= (Hong Nam-ki) High-density reconstruction is only possible in cases of public participation. It is only possible in reconstruction sites where members willingly agree. If they do not agree, the existing system applies. It is not a situation where it can be forced. Benefits such as increased floor area ratio and lifting of height restrictions may be preferred by association members. That is why only 20% of the volume was allocated.

▲The market points out that regulations such as the requirement of more than two years of actual residence and a structural safety score of 50 points are excessive. There are also claims that easing these regulations is necessary for effective supply beyond floor area ratio. Are there any additional relaxation measures?

= (Kim Hyun-mi) Reconstruction is a project to renovate the neighborhood where one lives. The condition of residing for more than two years is a system that fits the purpose. There are no special changes to other regulations.

-Since young people have long-term income, additional measures to increase loans may be necessary. Are there any plans to review additional financial support measures?

= (Hong Nam-ki) The special supply volume for first-time homebuyers has also been increased, and an additional 10 percentage points are added to the loan-to-value ratio (LTV) for mortgage loans. Interest rates on jeonse and monthly rent funds have also been further lowered. These are included in the July 10 measures. The groups that will benefit the most are young people and newlyweds. If additional review is needed depending on the situation, we will review all policies at any time.

▲The direction to expand pre-sale is being promoted. Has the existing policy to expand post-sale been abandoned?

= (Kim Hyun-mi) The government's policy to increase post-sale remains unchanged. Pilot projects are proceeding normally. However, since many people are worried about supply this time, the pre-sale system is being implemented to disperse demand in advance and reassure people. It will be centered on new towns next year and the year after. If possible, it will also be introduced in Tae-neung. Not all volumes will be pre-sold.

▲More than half of the newly announced volume is public redevelopment and reconstruction. Are there places that have expressed willingness to participate so far? Reconstruction also requires the consent of more than two-thirds of residents. How was the figure of 50,000 households derived?

= (Kim Hyun-mi) Public redevelopment is included in the lifting of maintenance zones this time. There was a demand from areas willing to participate in public redevelopment, so it was reflected in the system improvement. There are 93 project sites in Seoul that have been designated as maintenance zones but have not received project implementation approval, totaling about 260,000 households. About 20% of these are estimated to participate in public reconstruction, resulting in 50,000 households.

▲Camp Kim has not yet been fully returned, and the environmental pollution survey has not been completed. When will supply be possible?

= (Kim Hyun-mi) The environmental survey for Camp Kim is ongoing. Since the US military has already relocated from this site, there is no problem with early return once environmental negotiations are completed. The Ministry of National Defense will also actively engage in negotiations.

-This appears to be a policy with the intention to focus more on rental housing than ownership.

= (Kim Hyun-mi) It is not a rental-focused policy. Many supply measures have been announced, and a considerable portion is for sale. While we plan to actively increase rental housing, it does not mean only rental housing will be supplied without sale units. Korea's public rental housing will reach the OECD average of 8% this year. To ensure housing stability for low-income groups, it is urgent to continuously and stably supply public rental housing. By 2022, it will exceed the OECD average to 9%, and by 2025, it will reach 10%. We are working on projects to establish a foundation where 25% of all tenant households live in public rental housing. This will ensure housing stability for those in difficult living conditions, including young people, newlyweds, and low-income groups.

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