Redevelopment and Reconstruction 'Prohibition on Transfer of Association Status' Moved Up... Disadvantages for Areas with Frequent Ownership Changes (Comprehensive)

Ministry of Land and Seoul City Announce Measures at Housing Policy Meeting
Agree to Cooperate on Public and Private Redevelopment Projects
Plan to Ease Reconstruction Safety Inspections, Further Discussions Considering Market Stability

[Image source=Yonhap News]

[Asia Economy Reporters Kim Hyemin and Moon Jewon] The recognition timing for membership qualifications in redevelopment and reconstruction project zones in Seoul will be significantly advanced. For reconstruction, the transfer of member shares will be prohibited after passing the safety inspection, and for redevelopment, after the designation of the maintenance zone. Adjustments will be made to prevent overlap between public and private-led maintenance project zones, and zones with frequent ownership changes will be penalized during project bidding.

On the afternoon of the 9th, Minister of Land, Infrastructure and Transport Noh Hyungwook and Seoul Mayor Oh Sehoon held a policy meeting at the Government Seoul Office to stabilize the housing market and revitalize housing supply, announcing cooperation plans with these details.

The meeting was arranged to restore market trust in supply policies and to quickly alleviate market anxiety. It was based on the judgment that it is necessary for agency heads to meet directly to share perceptions of the market situation and establish a cooperative system.

◆Consensus on blocking speculative demand during redevelopment and reconstruction processes=At the meeting, they reaffirmed the joint goal of "stabilizing housing for ordinary citizens through supply expansion." They agreed to implement various measures to prevent supply projects from being perceived as development boons that induce short-term speculative demand and lead to market instability.

First, private redevelopment will adopt a public planning method, and public-led projects will establish reasonable maintenance plans through a preliminary review committee to prevent excessive privatization. The maintenance plan will include provisions to ensure that development profits arising from incentives such as floor area ratio increases are not privatized.

The timing for restricting the transfer of member status will be moved forward to the early stages of the project. This is a measure to preemptively block speculative demand aiming for development profits. Previously, in speculative overheated zones, reconstruction restricted member status transfers after approval of the association establishment, and redevelopment after approval of the management disposition plan. This meant that even if a house was purchased, the buyer could not obtain the association's pre-sale rights. However, the Ministry of Land, Infrastructure and Transport and Seoul City plan to advance this timing through amendments to the "Urban and Residential Environment Maintenance Act" to after passing the safety inspection for reconstruction and after designation of the maintenance zone for redevelopment. This was proposed by Mayor Oh at the Cabinet meeting on the 25th of last month.

However, the reference date will be separately determined by the city or provincial governor. Kim Susang, Director of the Housing and Land Office at the Ministry of Land, Infrastructure and Transport, explained, "There were concerns that if the restriction timing was fixed at a specific point, buying demand would concentrate before that stage. As a countermeasure, the two agencies agreed to allow the Seoul mayor to set the necessary timing considering local conditions."

In cases where the project does not progress to the next stage within two years after passing the safety inspection, designation of the maintenance zone, or establishment of the promotion committee, exceptions will be made to allow transfer of member status. This is to prevent a freeze in listings due to prolonged project stagnation. However, zones designated as land transaction permission zones will not be subject to this exception.

Maintenance zones where speculative concerns are detected will be penalized in evaluation criteria during public and private redevelopment project bidding. For example, if transaction volume and price trends exceed the average of the relevant local government, points will be deducted. The Ministry of Land, Infrastructure and Transport and Seoul City will also prepare additional measures such as immediate designation of land transaction permission zones if signs of market instability are detected even before related law amendments.

[Image source=Yonhap News]

◆Government actively supports private redevelopment, Seoul City supports public maintenance projects… cooperation on supply=Cooperation will be strengthened in housing supply expansion policies. Public-led maintenance project candidate sites promoted by the government will be excluded from Seoul City's redevelopment bidding areas, and Seoul City's redevelopment selected areas will be excluded from public-led maintenance project candidate sites to prevent conflicts between public and private projects.

Seoul City will cooperate to smoothly promote government-led public redevelopment, reconstruction, and public-led maintenance projects. To expedite the projects of the 80 candidate sites identified so far, a preliminary review committee will be formed within this month to finalize project plans early and proceed with district designation. Related personnel and organizations will also be expanded to ensure no disruption in project implementation by Korea Land and Housing Corporation (LH) and Seoul Housing and Communities Corporation (SH).

If the need is recognized to maintain zone regularity or urban planning continuity, the project target area among low-rise residential areas in the urban public housing complex project will include type 1 residential zones to improve project feasibility. The government will apply the same relaxation of the 7-floor regulation for type 2 residential zones proposed by Seoul City in its redevelopment revitalization plan to the urban public housing complex project. This means buildings can be raised up to 25 floors.

Relaxation of reconstruction safety inspections will be further discussed considering the housing market stabilization trend. However, Director Kim stated, "There was no discussion content agreeing on the principle of relaxing safety inspection standards. It was only discussed that additional consultations will continue," leaving room for further talks.

Discussions will also be held regarding housing supply on the Yongsan Camp Kim site announced earlier. Kim Seongbo, Head of Seoul City's Housing and Architecture Headquarters, said, "Housing supply on the Camp Kim site, Western Driver's License Test Site, and Sangam DMC site will be actively promoted as originally agreed with the government. There has been no suspension or abandonment of projects due to other factors so far."

Regarding the development of the Nowon-gu Taereung Golf Course site, Seoul City recently requested a review from the Ministry of Land, Infrastructure and Transport. However, Director Kim Susang said, "Consultations with related agencies have progressed considerably, so from the second half of the year, we expect to begin official permitting procedures."

[Image source=Yonhap News]

◆Long-term lease housing supply in public maintenance project rental housing=In terms of housing welfare, cooperation will also be made to expand the supply of long-term lease housing, which Seoul City is focusing on. Considering the support level for other public rentals and financial conditions, Seoul City will prepare housing fund support plans and consult with related ministries. Among public rental housing supplied through public-led maintenance projects, the SH Corporation's portion will be supplied as long-term lease housing. The possibility of supplying some LH Corporation units as long-term lease housing will also be actively reviewed.

Seoul City plans to introduce "Sangsaeng Housing" (private land lease-type housing where the city rents private land and supplies housing to youth and newlyweds) and will prepare incentives for landowners' participation before consulting with related ministries. Additionally, joint review will be conducted on expanding metropolitan local governments' participation in the selection of targets and price calculation processes related to apartment public announcements.

Through this, Seoul plans to supply an average of 107,000 households annually from 2021 to 2030 based on move-in volume. This is a 46.5% increase compared to the past average. Especially, the supply through public-led maintenance projects will be offered at 70-80% of market prices in prime locations within the city center. The share of general supply units with exclusive area of 85㎡ and sale price below 900 million KRW will be increased to half of the total, and the lottery system will be expanded to 30% to greatly increase opportunities for non-homeowners to purchase homes.

Minister Noh emphasized, "With the increased possibility of US interest rate hikes, if supply policies are implemented without disruption, housing prices are expected to stabilize downward in the mid to long term. When purchasing housing, it is necessary to consider the mid to long-term housing market outlook after 2023, so cautious judgment by market participants is required more than ever."

Mayor Oh said, "The ultimate goal of Seoul City's housing policy is, first and foremost, housing stability for ordinary citizens, and all premises are the stabilization of the real estate market. If the system improves through this cooperation, a foundation will be laid to rapidly promote various types of housing supply projects."

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