[2·4 Supply Measures] Association Dissolution, Public Implementation → Exemption from Re-Charge and 2-Year Actual Residence Requirement

Establishment of Public Direct Implementation Maintenance Projects... 136,000 Households Supplied
Public Sector Takes Over Redevelopment and Reconstruction Projects for Direct Implementation
Project Duration Drastically Reduced to Under 5 Years... Incentives Such as Floor Area Ratio

A view of Jamsil 5-danji Jugong complex in Songpa-gu, a representative reconstruction site in Seoul [Image source=Yonhap News]

[Asia Economy Reporters Onyu Lim and Sehee Jang] The government’s ‘Public Direct Implementation Redevelopment Project,’ newly established under the February 4 supply plan, strengthens the public nature of existing public redevelopment and reconstruction projects. It is a system where public enterprises such as Korea Land and Housing Corporation (LH) and Seoul Housing and Communities Corporation (SH) not only participate as joint implementers but also take over the project from the associations and act as the direct implementers.

Procedures are simplified by omitting management disposition approval and applying integrated review, shortening the project period to within five years. In particular, in this case, the Reconstruction Excess Profit Recovery System is excluded, the two-year residency obligation for association members is waived, and dramatic incentives such as floor area ratio increases are provided. Through this, 136,000 households will be supplied over five years in Seoul, the metropolitan area, and five major metropolitan cities.

The Public Direct Implementation Redevelopment Project means that if residents wish, public enterprises such as LH and SH directly implement redevelopment and reconstruction, and lead the establishment of project and sales plans. The government plans to supply housing in urban areas by drastically shortening the project period from over 13 years to less than five years, from the establishment of redevelopment plans to relocation.

To this end, the government has decided to support rapid approval procedures such as integrated review. Existing redevelopment projects lacked an integrated review system, causing excessive time consumption in various approvals such as building review and traffic impact assessment. The general meeting of the association and management disposition approval procedures are also omitted. The current procedure, which was ‘redevelopment plan → general meeting → project implementation approval → general meeting → management disposition approval → construction start,’ is simplified to ‘redevelopment plan → project implementation approval → construction start.’

The Public Direct Implementation Redevelopment Project can be applied for with the consent of half of the association members and is confirmed if two-thirds of the members agree within one year. Associations that confirm the Public Direct Implementation Redevelopment Project must transfer all authority to the public enterprise. They lose their status as the implementing company and transfer decision-making functions to the public enterprise, except for the right to select the construction brand. Association members receive priority supply rights for new apartments but must prepay their existing assets in kind to the public enterprise. Additional charges will be settled later. The public enterprise acquires the assets of association members who do not wish for priority supply as cash assets to secure the site.

To encourage participation, the government decided not to apply the two-year residency obligation for reconstruction association members who choose the Public Direct Implementation Redevelopment Project. Additionally, incentives such as a one-step upward change in land use zoning or a 120% increase in the legal maximum floor area ratio were offered. The reconstruction excess profit burden charge is also exempted. The purpose of this system is to prevent privatization of development profits, as the development profits belong to the public.

Experts pointed out that real estate prices are inevitably expected to rise due to the Public Direct Implementation Redevelopment Project. Professor Daejung Kwon of Myongji University’s Department of Real Estate said, “If LH, SH, and others directly implement redevelopment and reconstruction, it will have the effect of shortening the project period,” but added, “Ultimately, persuading opponents of reconstruction and redevelopment and guaranteeing their profits will be important.”

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