Allowing Trust-Based Housing Development in Land Transaction Permission Zones... Easing Urban Supply Constraints

Some Permitted Areas in Gangnam, Songpa, and Yongsan Combined
Previously, Housing Supply via Trust Method Not Allowed
Regulation Eased Following Criticism of Hindering Urban Supply

[Asia Economy Reporter Moon Jiwon] In the future, housing supply through trust methods will be possible even within land transaction permission zones. This regulatory easing measure comes amid growing concerns that housing supply in urban areas may decrease as some areas, including Gangnam, Songpa, and Yongsan districts in Seoul, are designated as land transaction permission zones.

The Ministry of Land, Infrastructure and Transport announced that the partial amendment to the Enforcement Decree of the Act on Real Estate Transaction Reporting, which allows trust development within land transaction permission zones, passed the Cabinet meeting on the 12th. The amendment is scheduled to be implemented from the 19th after the President's approval and promulgation.

A trust is a legal relationship in which a trustor transfers property such as land to a trustee or establishes a security interest, and the trustee manages, disposes of, operates, or develops the property for the benefit of the beneficiary. Using a land trust structure can enhance the independence and safety of a project, making it preferred by construction companies and financial institutions.

Previously, when acquiring land within a land transaction permission zone with permission, there was an obligation to directly use the land, making development through trusts impossible. Due to this structure, concerns arose that housing supply in downtown Seoul could be hindered after designating areas such as Samseong, Cheongdam, and Daechi neighborhoods in Gangnam-gu, Jamsil-dong in Songpa-gu, and the Jeongbichang site in Yongsan-gu as land transaction permission zones last year.

In fact, Developer A attempted to promote a mixed-use residential development through a trust method on approximately 2,400㎡ of office and neighborhood living facility land in Samseong-dong, Gangnam-gu, but the project was canceled last June when the area was designated as a land transaction permission zone.

Once the amendment is implemented, housing construction through trust development within permission zones will be allowed. When housing is developed and supplied through land trusts, exceptions to the land use obligation imposed on those who obtained land transaction permission will be recognized.

However, to prevent indiscriminate applications for transaction permission, the scope of trust allowance is limited to housing under the Housing Act and quasi-housing developments such as dormitories and officetels. Trusts for purposes other than development, such as management or disposal of existing buildings, are also prohibited.

Jung Woojin, Director of the Land Policy Division at the Ministry of Land, said, "Considering that trusts are widely used as a private real estate development method and to support new housing development in urban areas, we have pursued institutional improvements. We expect that this amendment will help revitalize housing supply in urban land transaction permission zones."

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