Reconstruction Charges for Commercial Association Members Reduced from August... Combined Calculation of Ancillary and Welfare Facilities

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Starting from August, when calculating the burden charges for reconstruction commercial association members, the prices of not only residential properties but also commercial and other ancillary welfare facilities will be combined and calculated. As a result, the reconstruction burden for commercial association members will decrease, accelerating the progress of some stalled reconstruction projects.

According to the Ministry of Land, Infrastructure and Transport on the 10th, the government published and promulgated the "Act on the Recovery of Excessive Profits from Reconstruction" (Reconstruction Excess Profit Recovery Act) with this content in the official gazette on the 3rd. This law will take effect from August 4, six months after its promulgation.

The current method of calculating reconstruction burden charges limits the target to residential properties only, which means the market prices of commercial and welfare facilities are not reflected. Additionally, when commercial association members receive apartment occupancy rights through reconstruction projects, the reconstruction burden charges increase, and the total burden amount tends to be overestimated, leading to concerns about unfairness.

The reconstruction burden charge is determined by subtracting the housing price at the start of the project from the housing price at the end of the project. Since commercial association members do not own residential properties, the housing price at the start is treated as zero.

The newly promulgated Reconstruction Excess Profit Recovery Act requires that the value of commercial properties be evaluated through an official appraisal and then combined with the housing price for calculation. With the overall reconstruction burden reduced, general association members will maintain their original burden levels, while the burden on commercial association members will be significantly reduced.

This measure is also expected to positively impact the promotion of reconstruction projects. Experts predict that reconstruction projects in major areas such as Seoul, which had been delayed due to opposition from commercial association members, are likely to gain momentum.

The reconstruction excess profit recovery system was introduced in 2006 to publicly recover excess profits generated from reconstruction projects. If profits exceeding 30 million KRW occur to associations or members through reconstruction projects, 10-50% of the profit amount is recovered. Although introduced in 2006, it was deferred for five years from 2012 to 2017 by legislative action and reinstated in January 2018. After a constitutional challenge led to a suspension of burden charge collection, the Constitutional Court ruled the system constitutional at the end of 2019, reviving it.

The Ministry of Land, Infrastructure and Transport explained, "This is a measure to reasonably calculate reconstruction burden charges and to promote fairness in the imposition of reconstruction burden charges."

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