Public Redevelopment to Build 20% More Than Legal Floor Area Ratio Limit

Concrete Measures for Real Estate Supply
Proposal for Amendment to the Provincial Government Act

1.2 Times Floor Area Ratio Benefit for Aged Residential Areas
Donation Ratio Applied at 20~50%

Total Construction Volume Increased
Donations Accepted for Exclusive 85㎡ Units
Policy to Secure Quantity and Quality of Rental Housing

[Asia Economy Reporters Inho Yoo and Chunhee Lee] In the future, when aging residential areas in three types of general residential zones in Seoul undergo public redevelopment projects, apartments can be built with a maximum floor area ratio (FAR) of up to 360%. Additionally, the donation ratio for public redevelopment will be lower than that of general redevelopment, ranging from 20% to 50%.

According to the Ministry of Land, Infrastructure and Transport (MOLIT) and the National Assembly on the 2nd, Assemblyman Chun Junho of the Democratic Party of Korea officially proposed a revision bill to the "Act on Maintenance and Improvement of Urban Areas and Dwelling Conditions" on the 1st, based on these details. This bill aims to specify the contents of the public redevelopment projects announced in MOLIT’s May 6 and August 4 real estate supply measures, and was prepared through consultations with MOLIT, Korea Land and Housing Corporation (LH), Seoul Metropolitan Government, and others. It is essentially the government’s finalized plan.

Public redevelopment is a redevelopment project in which public institutions such as LH and Seoul Housing and Communities Corporation (SH Corporation) participate as implementers. It is designated as a housing supply activation zone to promote the project quickly and transparently, while increasing housing supply through incentives on the floor area ratio.

Increasing Floor Area Ratio by 20% While Lowering Donation Ratio

The revision bill’s core content is to grant up to 120% of the legal maximum floor area ratio for public redevelopment, while lowering the donation ratio of the increased area?built as rental housing or similar?to 20?50%. In contrast, the donation ratio for general redevelopment is around 50?75%.

As the floor area ratio increases, the number of units constructed also rises. According to simulation data provided by LH to Assemblyman Chun, in a redevelopment zone in Seoul’s three types of general residential areas with 300 union households, pursuing general redevelopment would allow construction of a total of 600 units. Of the 300 units excluding those allocated to union members, 155 units are for general sale, and 145 units are public rental or private rental housing.

On the other hand, if public redevelopment is chosen with a floor area ratio of 360% and a donation ratio of 30%, the total number of units constructed increases to 700. The general sale units also increase by 45 units to 200 compared to general redevelopment. The donated units amount to 200, consisting of 140 public rental units and 60 private rental or equity-type housing units.

The revision bill particularly stipulates that while general redevelopment only accepted donations of small housing units of 60㎡ (exclusive area) or less, public redevelopment will accept medium-sized housing units up to 85㎡. The donation volume in LH’s simulation is also based on 85㎡ units. This is intended to supply a significant portion of rental housing from public redevelopment to multi-child families, thereby improving the quality of rental housing.

Higher Sale Prices Set for Speculative Purchases

Areas pursuing public redevelopment will be designated as housing supply activation zones. Local governments will form integrated review committees to handle various reviews required before approving the project implementation plan in an integrated manner. This is expected to reduce redevelopment speed to less than half of the current duration.

However, the revision bill plans to block speculative funds from entering public redevelopment by setting the sale price at the general sale price level for union members who purchase shares after the designation date of the public implementer or the housing supply activation zone, thereby preventing speculative gains.

The revision bill is scheduled to be enforced after a three-month grace period following its promulgation. The government intends to pass the bill during this regular session of the National Assembly, and if all goes as planned, it is expected to take effect from January next year. Meanwhile, the Seoul Metropolitan Government and MOLIT recently held a public redevelopment briefing session to explain the system and plan to accept applications from September to November.

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