Cost Linkage System Will Not Be Applied in Gangbuk-Area Redevelopments

Construction cost linkage and bond bidding systems will not be applied to redevelopment zones in the Gangbuk area of Seoul.

However, the two systems which the government is introducing as part of its effort to stabilize new apartment prices will apply without exception to apartments built on public housing land, including new towns, that are developed by the Korea Land Corporation or a local administrative body regardless of whether the seller is the Korea National Housing Corporation or a private construction company.

Deputy Prime Minister and Minister of Finance and Economy Han Duck-soo announced during a routine briefing at the Gwacheon Government Complex on August 4 that “the construction cost linkage system will be adopted for apartments built on all public housing land including, but not limited to, the new town of Pangyo, while the bond bidding system will be applied to all apartments whose actual area exceeds 25.7 pyeong.”

“We have not yet determined how much of the seller’s profits in bond bidding will be subject to redemption,” he added, “but we may require 80 to 90 percent of the margin (between market value and selling price) to be purchased in bonds.”

The bond bidding system was previously instituted from April 1983 to July 1999. At the time, the ceiling was set at 70 percent of capital gains.

Regarding the sale schedule for properties in Pangyo, Han stated, “The sale of mid- to large-sized units will be somewhat delayed,” adding, “It’s hard to specify a timeframe at this point, since we’re still in consultation with relevant agencies.”

He also noted, “At present, it is not easy to implement either the cost linkage system or the bond bidding system in the Gangbuk-area redevelopment zones.”

Chi-Young Shin higgledy@donga.com