[2020 National Audit] Seoul City Audit, Key Issues on Institutional Improvements for Expanding Housing Supply (Comprehensive Report 2)

[Image source=Yonhap News]

[Asia Economy Reporter Choi Dong-hyun] On the 20th, during the National Assembly Land, Infrastructure and Transport Committee’s audit of Seoul City held at Seoul City Hall, lawmakers continued to criticize and demand an expansion of housing supply and institutional improvements to resolve the housing shortage. In particular, many opinions emphasized the need for prompt supplementary measures related to major housing projects that Seoul City is focusing on, such as public redevelopment, public reconstruction, station-area youth housing, and social mix.

During the Seoul City audit, several opinions were raised about the need to improve the public redevelopment project. Public redevelopment is a redevelopment project in which the Korea Land and Housing Corporation (LH) or Seoul Housing and Communities Corporation (SH Corporation) participates as the implementing agency. In exchange for supplying 50% of the additional supply quantity, excluding the union members’ quota, as rental housing, benefits such as height limit increases, floor area ratio increases, and exemption from the price ceiling system are obtained. According to Acting Mayor Seo Jeong-hyeop of Seoul, currently, 24 project sites in Seoul have applied for public redevelopment contests.

Regarding this, Assemblyman Chun Jun-ho of the Democratic Party of Korea pointed out, "Despite efforts to supply quality housing such as public redevelopment, areas adjacent to Bukhansan like Gangbuk, Seongbuk, and Dobong districts are restricted from development due to height limits," adding, "It is necessary to relax the uniform height restrictions with customized regulations that consider regional characteristics."

Assemblyman Jo Oh-seop of the Democratic Party also stated, "To expedite the promotion of public redevelopment and reconstruction projects, it is necessary to shorten or exclude the feasibility review period for new investment projects by the Local Public Enterprise Evaluation Institute," and pointed out, "Constraints on funding procurement, such as enabling local public enterprises to secure their own funds, should also be improved."

Questions were also raised about the discord between Seoul City and the Ministry of Land, Infrastructure and Transport regarding public reconstruction. When Assemblyman Chun Jun-ho asked, "In the August 4th measures, Seoul City and the Ministry made different statements about public reconstruction; is there a disagreement?" Acting Mayor Seo firmly replied, "There is no disagreement." Public reconstruction is a project that relaxes the floor height limit from 35 to 50 floors and increases the floor area ratio to 300-500%, doubling the number of reconstructed houses. More than half of the increased floor area ratio is donated as public rental and public sale housing. Acting Mayor Seo said, "Fifteen sites have applied for preliminary consulting for public reconstruction and are currently under consultation," adding, "We plan to select leading project candidates by December."

Regarding station-area youth rental housing, many opinions suggested that the system should be revised to provide practical benefits to young people. Assemblyman Jo Oh-seop said, "Although Seoul City plans to purchase the remaining units when some are reclaimed as public contributions after 10 years in the station-area youth rental housing project, this is unrealistic," pointing out, "Due to the characteristics of station areas, land and building prices may skyrocket after 10 years, making actual purchase difficult." The station-area youth rental housing promoted by Seoul City ends the rental obligation of private developers after 10 years according to the Enforcement Decree of the Special Act on Private Rental Housing. Also, under the Act on the Recovery of Development Gains, 10-30% of the site is set aside by use as a public contribution to remain as existing youth rental housing, while the rest allows private developers to newly set rental deposits and rents.

There were also criticisms that the area of youth rental housing should be increased and rents lowered. Assemblyman Kim Hee-guk of the People Power Party said, "The area and rent of youth housing do not meet the expectations of demanders," adding, "To increase the area and lower rents, the Korea Land and Housing Corporation (LH) should secure exclusive land and promote rent reductions through tax cuts." He continued, "Since the implementer has to buy land from landowners to start, the costs are too high," and added, "The part that limits the project promoter to landowners also needs to be reconsidered."

The fact that youth rental housing has little price advantage compared to surrounding market prices was also raised. According to materials distributed by Assemblyman Lee Jong-bae of the People Power Party on the day, half of the youth housing in Guui-dong, Gwangjin-gu, which started occupancy in April, is vacant. The housing has a deposit of 45 million KRW and a monthly rent of 460,000 KRW. Applying Gwangjin-gu’s deposit-to-rent conversion rate of 6.9%, the deposit converts to 10 million KRW, making the monthly rent 660,000 KRW. Contrary to Seoul City’s initial promise to supply at prices cheaper than the surrounding market, the prices are high, reducing youth demand.

It was also pointed out that the social mix of Seoul City’s rental housing is not functioning properly. Assemblyman Moon Jin-seok of the Democratic Party cited cases such as Maesena Polis in Hapjeong-dong, Mapo-gu; The H Honor Hills in Gaepo-dong, Gangnam-gu; Bomun Parkview Xi in Seongbuk-gu; and Raemian Elinity in Yongdu-dong, Dongdaemun-gu, saying, "I don’t know how Seoul City is considering social mix, but there seem to be problems." Assemblyman Moon particularly presented a bird’s-eye view of Raemian Elinity, saying, "Looking at the photo, you can immediately identify where the rental buildings are," and criticized, "Two buildings in the same apartment complex are separated by a road and placed opposite each other." In response, Acting Mayor Seo said, "In the past, there was a lack of judgment regarding social mix," adding, "We established public rental housing standards last September and are creating a philosophy for a fundamental change in the perception of social mix."

During the audit, questions also continued regarding the development of Taereung Golf Course, Yongsan Camp Kim, and Songhyeon-dong sites. Assemblyman Lee Jong-bae said, "The August 4th measures include Taereung Golf Course, Yongsan Camp Kim, and Sangam DMC, but opposition from district mayors and local residents continues," asking for Seoul City’s response plans. Acting Mayor Seo replied, "Before the announcement of the measures, sufficient consultation with district mayors and local residents was not conducted," adding, "We are currently making efforts to consult with district offices and residents."

Regarding the parkification of Korean Air’s Songhyeon-dong site, Acting Mayor Seo emphasized, "We will preserve the history and tradition and create a cultural park to return it to the citizens." He further explained, "This is currently under discussion through mediation by the Anti-Corruption and Civil Rights Commission (ACRC), and it is not a legal infringement of private property rights," adding, "We are gathering opinions with Korean Air under ACRC mediation and will fairly evaluate the appraisal price, including the purchase method, to reach an agreement."

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