Relocation Loan Limits Also Split Between Gangnam and Northern Seoul... 600 Million Won in Gangnam and Songpa, Only 200 Million Won in Northern Seoul

Wide Gap Between Theory and Reality of Relocation Loans
Varied Outcomes Depending on Income and Home Prices

"As far as I know, the relocation loan limit is 600 million won, but since there are no restrictions on jeonse loans when actually securing a rental, combining the two loans does not pose a significant burden."

Lee Eogwon, Chairman of the Financial Services Commission, made this statement recently in response to Seoul City's call for easing relocation loan regulations. He added, "If actual problems arise in the field, we will look into them," but his stance was in stark contrast to that of Seoul City.

Seoul Mayor Oh Se-hoon is conducting an on-site inspection of the redevelopment project area in Sillim 7 District, Gwanak-gu, Seoul on January 19, 2026. Photo by Dongju Yoon

The government and Seoul City are clashing over relocation loans, but it is difficult to say that either side is entirely correct. Depending on the situation, both perspectives could be valid or not. Relocation loans are provided to support members of redevelopment or reconstruction associations with the funds needed to demolish their existing homes and move to temporary residences during the process. Seoul City has continuously raised concerns that relocation loan regulations, which have been in place since the "October 15 Housing Market Stabilization Measures," have made it difficult for association members to secure funds, thereby delaying private maintenance projects overall. Mayor Oh Sehoon of Seoul also visited project sites and remarked that "without easing relocation loan regulations, it will be difficult to avoid a supply cliff."

The financial authorities' position that up to 1.1 billion won can be raised by utilizing both relocation and jeonse loans is also correct, provided certain conditions are met. According to the financial authorities, for owners of a single home, the relocation loan is capped at 600 million won, calculated as 40% of the appraised value of the property (the loan-to-value ratio). In addition, up to 500 million won can be borrowed through a jeonse loan.

However, to receive the full 1.1 billion won, certain requirements must be met. To simply qualify for the maximum amount, one must have an annual income of approximately 160 million won, an appraised home value of around 1.5 billion won, be a single-home owner, and have no existing loans. The appraised value is finalized after the management disposition approval and is typically set at 70-80% of the actual transaction price. The loan limit is determined based on this amount, and by region, it is estimated that redevelopment complexes such as Gaepo Jugong 5th Apartment Complex and Gaepo Hanshin in Dogok-dong in Gangnam-gu (at the management disposition approval stage), as well as Garak Plaza Apartment in Songpa-gu, could receive the maximum relocation loan limit of 600 million won.

However, since both the principal and interest payments for relocation loans and the interest on jeonse loans are included in the total debt service ratio (DSR), the actual loan amount decreases significantly as income decreases. For example, for a single-home owner with an appraised home value of 500 million won, an annual income of 30 million won, and no existing loans, the amount available through a relocation loan is about 200 million won.

In this case, the jeonse loan would be limited to around 50 million won. Even including personal funds, one would have to find a rental within 250 million won. According to real estate statistics from the Korea Real Estate Board, the median jeonse price in the northeastern districts of Seoul-such as Gangbuk, Nowon, and Dongdaemun-was 457 million won as of last month. With this level of funding, it is virtually impossible to secure a rental in nearby areas.

Seoul City believes that this structure is even more severe in northern Seoul, where there are more small- to mid-sized maintenance projects and lower income levels, compared to the wealthier Gangnam area. The city argues that loan regulations are deepening the funding gap between Gangnam and smaller project areas. An executive from a private maintenance association preparing for relocation said, "Many members are demanding that at least the relocation loan limit be adjusted to reflect current realities," adding, "With loans being blocked, even the relocation schedule itself is being disrupted."

According to Seoul City, 39 out of 43 maintenance project zones scheduled for relocation this year are affected by relocation loan regulations, impacting approximately 31,000 households.

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