Regional Housing Cooperatives Can Proceed with Projects by Securing Only 80% of Land Ownership

Ministry of Land Announces Measures to Prevent Damage and Normalize Regional Housing Cooperatives

Accelerating Approved Projects... Enhanced Transparency and Dispute Prevention in Cooperative Management

The threshold for securing land ownership required for project plan approval in regional housing cooperative projects will be lowered from the current 95% to 80%. A registration system will be introduced to allow specialized companies to handle cooperative management work. In addition, when construction costs increase, verification by an external professional organization will become mandatory. Cooperatives will also be required to disclose details of fund usage to enhance transparency.

The Ministry of Land, Infrastructure and Transport announced these measures on April 20 to prevent damage to members of regional housing cooperatives and to normalize project operations. Regional housing cooperatives have long faced criticism for having high land acquisition standards, slow project progress, low success rates, and significant member losses. Last October, the government strengthened initial entry requirements. This time, the focus is on accelerating the pace of already-approved projects and protecting the rights and interests of cooperative members.

Addressing Land Acquisition Difficulties and Member Shortages to Prevent Project Delays

The lowering of the land ownership threshold to 80% is intended to prevent so-called “holdout” issues. Under the current 95% standard, it was common for a small number of landowners holding more than 5% to delay projects by refusing to sell or demanding excessive prices. The threshold will be lowered to 80%, the same as for general housing construction projects. For the remaining land, the right to request a compulsory sale will be exercisable after project approval.

In May last year, Lee Jae-myung, then the Democratic Party presidential candidate, was listening to complaints from Daegu citizens about local housing cooperatives in Goryeong County, Gyeongbuk. Photo by Yonhap News Agency

Currently, a recruitment report can be filed if rights of use, equivalent to land use consent, are secured for 50% of the land, and cooperative establishment can be approved with 80% rights of use and at least 15% land ownership. Afterward, 95% land ownership is required to approve the project plan. Under the amended regulations, existing cooperatives will maintain the current standards for recruitment reporting and establishment approval, but project plan approval will be eased to 80% land ownership.

For new cooperatives, a recruitment report can be filed when land sale contracts cover at least 80% of the land. The standards for cooperative establishment approval will be set at 65% land sale contracts and 15% land ownership, with project plan approval also requiring 80% land ownership. Cooperatives that have not applied for project plan approval before the amended implementation date may apply the relaxed standards.

Local residents who own or reside in a house within the project area will now be allowed to join as cooperative members. Previously, only those without a home or those with a single house of 85 square meters or less could participate, but to encourage resettlement of existing residents, people who have owned a home for more than two years and lived in it for more than one year will be exempt from the 85 square meter restriction. When filling member vacancies, membership eligibility will be determined based on the date of application for cooperative membership.

Increased Professionalism and Transparency in Cooperative Management

The registration system for management agents will impose strict requirements regarding capital and professional personnel, aiming to prevent unqualified companies from entering the market. This addresses concerns that, under the current system, it is difficult to regulate poorly managed companies due to a lack of effective sanctions.

When a construction company requests an increase in construction costs, verification by a professional organization such as the Korea Real Estate Board will be mandatory. Such procedures will be required if at least 20% of cooperative members request it, if the increase exceeds 5% of the initial construction cost, or if the increase is more than 3% of the revised construction cost. To maintain fair contractual relationships with construction companies, competitive bidding will be mandated, and regulations will be established to allow the cooperative to implement projects independently, rather than through joint execution.

Vacant houses in the Hwal-gokdong area, where a regional housing association project was previously promoted but discontinued. Photo by Lee Seungjin

There will also be provisions to enable cooperative members to access details and supporting documentation regarding fund withdrawals and usage. If such information is not disclosed, fund withdrawals will be restricted. The requirements for disclosure, including contact information, will be clearly defined, and if at least 20% of members request it, an audit will be conducted—addressing recurring issues in cooperative operation.

Online general meetings and electronic voting systems will be introduced. To ensure transparency in decision-making, the scope for appointing proxies will be limited to spouses and direct family members. For significant matters related to members’ property rights, such as the determination of individual contributions, the quorum will be raised from a majority presence and approval to at least two-thirds presence and two-thirds approval. The withdrawal period for membership will be extended from 30 to 60 days, allowing members more time to carefully consider the viability of the project before joining.

Faster Dissolution of Insolvent or Completed Cooperatives

New grounds will be established to expedite the dissolution of insolvent cooperatives. Currently, if a project is delayed, dissolution or project termination can be decided at a general meeting, but if the proposal fails once, no further votes are allowed. Under the new system, if cooperative establishment or project plan approval has not been obtained for more than a year after a failed general meeting vote, a new vote can be initiated if at least one-third of members request it, allowing the issue to be addressed again at a general meeting.

In addition, information such as land acquisition rates and contribution payment status will be provided semiannually, and a full-scale status inspection will be conducted annually by local governments or other relevant authorities. For long-inactive cooperatives, local governments will have the authority to cancel them through hearings or other procedures. Cooperatives that have completed their projects will be required to hold a dissolution general meeting within one year, and if dissolution is not carried out without a valid reason, local governments will be able to dissolve the cooperative by administrative order. Regulations will also be established to allow local governments to request status inspections or data provision.

The Ministry of Land, Infrastructure and Transport expects these changes to be implemented from next year following legal amendments. Kim Eetak, First Vice Minister of the Ministry of Land, Infrastructure and Transport, stated, "This policy incorporates as much on-the-ground feedback as possible to resolve chronic obstacles in regional housing cooperative projects, accelerate project progress, and protect the rights and interests of cooperative members," adding, "We expect that damage to regional housing cooperative members will be significantly reduced."

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