Simultaneous Approval of Reconstruction Association Establishment and Zone Designation Allowed... Reducing Project Duration by 5 to 6 Years

Start of Reconstruction Possible Before Safety Inspection for Apartments Over 30 Years Old
Improvement of Safety Inspection Standards for Highly Aged Apartments
Relaxation of Redevelopment Age Criteria from 66% to 60%
Targeting 2027 Construction Start for 1st Generation New Town Pilot Zones
Tax Support for Purchase of Small Houses Under 60㎡

One of the main highlights of the 'Measures to Expand Housing Supply and Supplement the Construction Market for National Housing Stability' announced on the 10th is increasing housing supply in urban areas. To this end, the government has decided to reduce the stages of reconstruction and redevelopment projects and lower entry barriers. The plan is to advance the timing of association establishment and simultaneously process the designation of maintenance zones to shorten the reconstruction project period by 5 to 6 years. In particular, by changing the safety inspection standards to focus on aging, apartments over 30 years old in Nowon, Gangnam, and Gangseo districts are expected to benefit.

Seoul City approved the architectural plan for the reconstruction project of Sanggye Jugong Complex 5 at the 15th Architecture Committee meeting. The photo shows Sanggye Jugong Complex 5 in Nowon-gu, Seoul, on the 31st. Photo by Jinhyung Kang aymsdream@

Reconstruction Period Shortened by 5 to 6 Years

To expand housing supply in urban areas, the government has introduced the 'Reconstruction Fast Track' card. The reconstruction fast track involves conducting safety inspections, maintenance zone designation, and association establishment simultaneously.

The current reconstruction project procedure consists of nine steps: safety inspection, proposal submission, maintenance zone designation, formation of promotion committee, association application, association establishment, project implementation approval, management disposition approval, and commencement of construction. Going forward, apartments over 30 years old can immediately form a promotion committee, provided they pass the safety inspection before project implementation approval. Association establishment approval and maintenance zone designation can be processed simultaneously. The aim is to clarify the reconstruction project entities and accelerate project progress by advancing the association establishment stage.

To delay the timing of passing safety inspections and advance the formation of project entities, legal amendments are required, and the Ministry of Land, Infrastructure and Transport (MOLIT) plans to propose amendments to the Urban Maintenance Act in February. For apartments over 30 years old that fail to pass safety inspections, the majority are located in Seoul’s Nowon, Gangnam, Gangseo, and Dobong districts, followed by Ansan, Suwon, Gwangmyeong, and Pyeongtaek cities in Gyeonggi Province.

The aging criteria and zone designation requirements for redevelopment projects will also be relaxed. Previously, at least two-thirds of buildings had to be over 30 years old to initiate a project, but this requirement will be lowered to 60%, and idle or neglected small parcels of land can also be included. MOLIT estimates that 950,000 housing units will be eligible for maintenance projects over the next four years, with 750,000 units for reconstruction and 200,000 units for redevelopment.

Jin Hyun-hwan, the first vice minister of MOLIT, explained, "While previous safety inspections focused on safety, now they will mainly consider living inconveniences and aging, and if residents agree, safety inspections will no longer be an obstacle." He added, "In redevelopment cases, the minimum project period is expected to be reduced by three years."

To minimize cases where projects are halted due to conflicts between associations and construction companies caused by recent construction cost increases, a standard contract will also be distributed. The effectiveness of local government dispute mediation committees will be equated with judicial 'conciliation.'

First-Generation New Town Reconstruction Leading Districts Target Construction Start in 2027

The designation and commencement of leading districts in aging planned cities such as first-generation new towns will also be expedited. Leading districts will be designated this year with the goal of starting construction in 2027 and moving in by 2030. Depending on residents’ wishes, more than two leading districts per region may be selected. A MOLIT official explained, "Some local governments, after gathering residents’ opinions, found that over 70% of residents wish to proceed with the project. In areas where the project progresses smoothly, it may be possible to designate two to three leading districts."

Additionally, to renovate aging planned cities, a 'Future City Fund' worth 12 trillion won will be established, and a dedicated guarantee product for new town maintenance will be launched. From 2025, at least one relocation complex per new town will be created.

To activate small-scale maintenance projects, the eligible project areas will be expanded and procedures simplified. Zone designation will be allowed across adjacent roads, the aging requirement will be lowered to 60%, and the resident consent rate for association establishment will be relaxed from the current 80% to 75%.

Urban-Type Residential Housing Regulations Eased and Tax Support for Small Housing Purchases

To expand the supply of small housing for one- to two-person households, supply regulations will be eased and tax support provided to reduce purchase burdens. According to MOLIT, as of November last year, the number of permits issued was 294,000 units, and the number of housing starts was 170,000 units. Notably, apartment permits decreased by 34% compared to the previous year, and other housing types dropped by 51%.

Accordingly, MOLIT will remove the restrictions on the number of households in urban-type residential housing and the limit allowing only up to half of the total households, and will lower parking lot installation standards by allowing shared vehicle parking spaces to count as 50%, reducing the parking space per household from the current 0.6 to 0.26. Balcony installation in officetels will also be fully permitted.

From January until December next year, purchasing newly built housing under 60㎡ (excluding apartments) will qualify for up to a 50% reduction in acquisition tax. These houses will be excluded from the count when calculating acquisition tax, capital gains tax, and comprehensive real estate tax. For the next two years, purchasing and registering small existing housing (excluding apartments) as rental (purchase rental) will also exclude them from the housing count for tax purposes.

The short-term registered rental system, abolished in 2020, will be revived. Details on rental obligation periods, targets, and tax benefits will be announced later. A new 'corporate-type long-term private rental' will also be introduced, but the operating entity will be limited to long-term rental REITs. A business model providing specialized housing services for the elderly or youth will also be developed.

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