[Exclusive] Central Government to Lead Reconstruction and Redevelopment... Grants One-Time Permit Authority

Review to Prevent Indefinite Project Delays
Easing of Resident Consent Requirements for Reconstruction
Focus on Supply Surge in Downtown Seoul
Experts: "Relaxing Rebuilding Oversupply Regulations Will Have Long-Term Price Stabilization Effects"

[Asia Economy Reporter Jang Sehee] The core of the large-scale housing supply measures to be announced around the 4th is deregulation. In particular, the easing of reconstruction requirements clearly shows that the government is placing greater emphasis on expanding supply, as market experts have continuously demanded this. It is also analyzed that the plan to temporarily allow central government officials to approve reconstruction and redevelopment permits aims for a speedy supply.

According to related ministries such as the Ministry of Land, Infrastructure and Transport and the Ministry of Economy and Finance on the 1st, the government plans to allow central government officials to temporarily approve reconstruction and redevelopment projects in Seoul and the metropolitan area, in addition to mayors of cities, counties, and districts, to accelerate these projects. However, the government plans to apply this only to the measures announced this time. A government official said, "To develop station areas, changes in land use and urban planning are required, but if blocked by the local government, projects can be indefinitely delayed," adding, "We are considering a plan to temporarily allow central government officials to approve reconstruction and redevelopment projects to speed up the process." He also added, "It is expected that more than 150,000 households will be supplied in the metropolitan area."

This means that in addition to deregulation measures such as increasing floor area ratios and adjusting the burden rate of the reconstruction excess profit recovery system, an additional channel has been prepared to ensure actual market supply.

The plan to reduce the reconstruction excess profit burden is expected to be a key part of this measure. Currently, the burden rate under the reconstruction excess profit recovery system is up to 50% of the profit, but it is highly likely to be lowered. The government intends to pull together various deregulation measures to make the supply plan effective. According to last year's Ministry of Land, Infrastructure and Transport simulation, the average burden for five complexes in Gangnam was between 440 million and 520 million KRW. The government expects that lowering the reconstruction excess profit recovery rate will increase the number of participants in the projects.

The government is also considering easing the 75% resident consent requirement for reconstruction. Currently, reconstruction requires more than 75% resident consent to establish an association, but remodeling only requires more than 66.7% consent.

Along with this, the government is focusing on supply within downtown Seoul. This is to differentiate from the initial announcement that included Gyeonggi Province and other metropolitan areas. The plan is to secure as much supply as possible by developing station areas, semi-industrial zones, and low-rise residential areas. In particular, the radius of station areas will be expanded to 500 meters, doubling the previous range, and the floor area ratio for low-rise residential areas will be increased by about 20% compared to the original plan.

However, the government has decided not to include the previously mentioned Greenbelt release in this measure. A government official explained, "Releasing the Greenbelt could immediately fuel housing price increases, so it is not being considered."

Experts advise that new site development should accompany deregulation. Professor Shim Gyo-eon of Konkuk University's Department of Real Estate said, "While easing the reconstruction excess profit recovery system may cause short-term price increases, it will have a price stabilization effect in the long term," adding, "It is important to maximize new supply where there is demand."

There is also an opinion that housing stability measures for residents participating in the projects should be included along with deregulation. Professor Kwon Daejung of Myongji University cited cases where residents sell their homes because they cannot pay additional burdens in reconstruction and redevelopment, saying, "Benefits such as long-term low-interest loans should be provided to help the resettlement of those participating in reconstruction and redevelopment."

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