Housing Compound Redevelopers Likely Required to Build More Lease Units

Starting in March of next year, the redevelopment of an apartment complex will assign a proportion of new units for long-term lease in areas where the government attempts to curb the inflow of population such as Seoul.

The Ministry of Construction and Transportation said on July 12 that it will officially announce a revision of the Urban Living Condition Management Act which centers on such a new policy.

The new measure designed by the government to redistribute profits on the redevelopment of real estate properties will likely cause repercussions as many redevelopment unions strongly protested it and said they would renounce their licenses or projects.

Under the amendment, the new redevelopment housing projects which did not get permits before the revision’s enactment will have to earmark up to 25 percent of their capacity, or the ratio of the buildings against the land, for lease units. To stave off the risk of constitutionality dispute over personal property, the government will allow redevelopers to expand their building capacities to as much as the total volume of lease units. However, they will have to designate 10 percent of the expanded capacities for lease.

The amendment will likely take effect in March of next year after reviews at the regulator reform committee, the Ministry of Legislation, and a Cabinet meeting as well as an approval at the National Assembly.

Here are the areas in the Seoul metropolitan area which the government is bent on attempting to curb the ongoing or possible influx of population and industry: Seoul, Incheon (Ganghwa and Ungjin excluded), Uijeongbu, Guri, parts of South Yangju, Hanam, Goyang, Suwon, Seongnam, Anyang, Bucheon, Gwangmyeong, Gwacheon, Uiwang, Kunpo and Siheung.

Kwang-Hyun Kim In-Jik Cho kkh@donga.com cij1999@donga.com