Reconsideration of the 'Abolition of Actual Residence Obligation Law' for Sale Apartments Next Month

Ruling and Opposition Parties Agree to Reassess on the 10th of Next Month Due to Major Disagreements

On the morning of the 26th, the National Assembly's Land, Infrastructure and Transport Committee held a bill review subcommittee meeting and presented a revision to the Housing Act that would abolish the mandatory residence requirement, but the review was postponed.

A Land Committee official stated, "There are many disagreements regarding the bill to abolish the mandatory residence requirement, so it was decided to discuss it again at the Land Committee subcommittee on May 10."

The Housing Act amendment discussed that day mainly focuses on abolishing or relaxing the residence obligation for houses subject to the price ceiling system. The abolition of the mandatory residence requirement is part of the government's real estate market revitalization plan, which significantly relaxes the restrictions on resale of pre-sale rights. Previously, the Ministry of Land, Infrastructure and Transport amended the Enforcement Decree of the Housing Act, easing the resale restriction period for pre-sale rights in the metropolitan area from a maximum of 10 years to 3 years for public land and regulated areas and areas subject to the price ceiling system, 1 year for the overconcentration control zone, and 6 months for other areas, effective from the 7th of this month.

Kim Min-ki, Chairman of the National Assembly Land, Infrastructure and Transport Committee, is presiding over the full committee meeting held at the National Assembly in Yeouido, Seoul on September 20, 2022, and striking the gavel. 2022.9.20 Photo by National Assembly Press Photographers [Image source=Yonhap News]

While the government can ease resale restrictions through the amendment of the Enforcement Decree, abolishing the mandatory residence requirement requires an amendment to the Housing Act and must be passed by the National Assembly. The People Power Party and the government decided on the same day to pass the Housing Act amendment. The Ministry of Land, Infrastructure and Transport conveyed to the National Assembly that "it is necessary to take preemptive measures such as securing housing rental supply in the metropolitan area by relaxing the residence obligation system applied in the metropolitan area." The industry also supports relaxing the residence obligation system to revitalize housing transactions.

However, the Democratic Party of Korea expressed a negative stance on the Housing Act amendment to abolish the mandatory residence requirement, leading to another postponement.

The amendment to the Act on the Excessive Profits from Reconstruction will be reviewed at the subcommittee in the afternoon. The amendment, proposed in November last year, aims to relax the exemption criteria for reconstruction charges per union member from the existing 30 million KRW or less to 100 million KRW or less and to expand the charge rate application range from 20 million KRW to 70 million KRW.

The Excessive Reconstruction Profit Charge (Jaechohwan) is a system that imposes a charge of up to 50% on the profit from reconstruction, calculated by subtracting construction costs, development expenses, and average housing price increases from the market price gain. It has been cited as a factor that hinders the feasibility of reconstruction projects by imposing charges amounting to hundreds of millions of KRW per household, making reconstruction promotion difficult.

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