Will the Easing of the Capital Gains Tax on Reinvestment and the Special Act for 1st Generation New Towns Stop Stalling in the National Assembly This Month?

Land, Infrastructure and Transport Committee, Temporary Session Bill Review Subcommittee Discussion on the 15th
'Abolition of Actual Residence Obligation' Housing Act Amendment Bill Excluded

Attention is focused on whether there will be progress in the discussions on easing the Reconstruction Excess Profit Recovery System (재초환) and enacting a special law for the redevelopment of first-generation new towns during this month's extraordinary session of the National Assembly.

View of city apartments from the Seoul Lotte World Tower observation deck. / Photo by Yonhap News

According to the National Assembly and the Ministry of Land, Infrastructure and Transport on the 13th, the Land, Infrastructure and Transport Committee will hold a subcommittee meeting on land-related bills on the 15th during the extraordinary session to discuss contentious bills. The subcommittee meetings alternate between transportation and land sectors, and a plenary session is scheduled for the 29th. The extraordinary session will last throughout June.

The subcommittee will consider bills that have been pending for several months. These include the "Amendment to the Act on Recovery of Excess Reconstruction Profits," which contains measures to ease reconstruction charges, and the "Special Act on Redevelopment and Support of Aging Planned Cities" for the redevelopment of first-generation new towns.

The amendment to the Reconstruction Excess Profit Recovery Act was originally introduced by Kim Jeong-jae, a member of the People Power Party, in November last year but was sidelined for a while due to special laws supporting victims of jeonse fraud. The government has set a goal to complete the amendment process within the first half of this year.

The amendment includes easing the exemption criteria for reconstruction charges per union member from the existing 30 million KRW or less to 100 million KRW or less. The application range for the charge rate will be expanded from 20 million KRW to 70 million KRW.

It also delays the start date for calculating excess profits from the "approval date of the promotion committee formation" to the "approval date of the union establishment" and includes provisions to additionally reduce charges by 10-50% based on the holding period for long-term homeowners of a single house, calculated retroactively from the housing completion date.

The opposition initially expressed concerns that passing the amendment might deepen inequality but reportedly does not oppose the reduction of charges itself. However, as discussions in the National Assembly have stalled, the National Reconstruction Maintenance Project Union Solidarity has been holding rallies every Thursday since the 18th of last month to urge the passage of the amendment.

The special law for the redevelopment of first-generation new towns such as Bundang and Ilsan has also been submitted as an agenda item to the subcommittee. The law aims to grant exemptions or relaxations on safety inspections, land use changes, and floor area ratio benefits to 49 aging housing districts nationwide.

Residents of the affected areas are also requesting that the special law include detached houses in addition to apartments and provide support for old downtown areas. Meanwhile, Minister of Land, Infrastructure and Transport Won Hee-ryong recently met with residents of Pyeongchon New Town in Anyang City, Gyeonggi Province, and stated, "There are no major issues between the ruling and opposition parties regarding the special law, so I hope it will be settled before the summer vacation period ends."

Meanwhile, the "Housing Act Amendment," which aims to abolish the mandatory residence requirement for houses subject to the price ceiling system, was excluded from the agenda due to significant disagreements between the ruling and opposition parties. The opposition has expressed concerns that abolishing the residence requirement could increase risks of gap investments and "empty lease" (Kkangtong Jeonse).

Earlier, the government shortened the resale restriction period for apartment pre-sale rights in the metropolitan area from a maximum of 10 years to 3 years starting April 7. However, since the residence requirement remains, resale is practically impossible, leading to criticism that the measure lacks effectiveness.

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