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Apartments Eligible for Cost Linkage System to be Banned from Sale

Apartments Eligible for Cost Linkage System to be Banned from Sale

Posted December. 13, 2004 22:28,   


From now on, if you buy an apartment to which the cost linkage system is applied, you won’t be allowed to sell it for five years at the longest.

The Ministry of Construction and Transportation said on December 13 that it set the range of the period to limit the resale of apartments the cost linkage system is applied to, as it recently passed a revised bill on housing law regarding the cost linkage system, bond bidding system and disclosure of the original sale price.

Apartments with space 25.7 pyeong or less sold by public institutions or private companies using public space will be eligible for cost linkage system.

In the beginning, the government had planned to stipulate the limitation period in the enforcement ordinance. Yet, the period was finally set to five years at the longest after conclusion of sales contract during the inspection process conducted by National Assembly’s Legislation-Judiciary Committee.

The period to limit resale of apartments is likely to be set from three to five years according to housing law enforcement ordinance.

In the case of apartments, it generally takes about two years for owners to conclude the sales contract and move in. Given that, owners, from now on, won’t be able to sell their house(s) for two years after the purchase of sales rights and three years at the longest after moving in.

With a cost linkage system in place, the government determines the sales price of apartments, taking construction cost into account. Therefore, sales prices of apartments eligible for the system are expected to be lower than that of nearby apartments by somewhere around 20 percent.

This popular expectation resulted in voices that long-term limits of resale rights should be imposed on those who win the bidding on apartments the system is applied to.

In line with that, the period to start enforcing a new housing law was shortened from three months to two months after the law’s promulgation. The new housing law, accordingly, is believed to come into effect starting early March, two months after its promulgation early next year.

In the meantime, regarding apartments with the cost linkage system, the Construction and Transportation Ministry is now mending rules on the amount of preferential supply of apartments for the homeless and limits on lease requirements. Forecasts are that the amount of preferential apartments for the homeless over 35 and bidders who haven’t owned a house for the last five years will be more than 75 percent of the total.

In terms of limits on lease requirements, a variety of measures are now being examined such as banning another bid for the following 10 years after winning a bid on an apartment the cost linkage system is applied to.

Kwang-Hyun Kim kkh@donga.com