Seoul City has assessed that some of its demands were reflected in the housing supply measures announced by the government on August 13, including the easing of relocation loan regulations, a reduction in the consent rate for redevelopment associations, and an increase in the purchase price of rental housing. However, it pointed out that key requests such as easing restrictions on member status transfer and expanding the floor area ratio for private redevelopment projects were not included.
Following the Ministry of Land, Infrastructure and Transport's announcement of the 'Rapid Housing Supply Measures for Stabilizing the Rental and Sales Market' at 2 p.m. on the same day, Seoul City held a briefing. Myung No-jun, the head of the Seoul Housing Office, stated, "Some of the issues that Seoul City has continuously proposed to the government have been reflected. It is a significant advancement that the government has accepted some of Seoul's proposals and is moving to improve the system to expand housing supply."
Among the key demands from Seoul City were: lowering the consent rate for redevelopment associations from 75% to 70%, increasing the loan-to-value (LTV) ratio for relocation loans to 70%, adjusting the mandatory ratio of rental housing in redevelopment projects, expanding the floor area ratio for private redevelopment projects, and temporarily suspending the restriction on member status transfer for three years.
The government has lowered the consent rate for redevelopment associations from 75% to 70%, and the consent rate for public redevelopment and reconstruction project implementers has also been eased from 67% to 60%. This aims to reduce the burden of resident consent in the early stages of redevelopment projects and accelerate project progress.
Easing of Relocation Loan Regulations Maintained at 40% LTV, Expanding Loan Capacity
Relocation loan regulations will also be partially eased. Although the requested increase in the LTV ratio for relocation loans to 70% was not fully reflected, the criteria for calculating loan limits will be changed to increase loan capacity.
Previously, the LTV for relocation loans was based on the value of land and buildings before the redevelopment project. In the future, the LTV will be calculated based on the greater of the pre-redevelopment asset valuation and the estimated value of new housing after the redevelopment.
Seoul City believes this measure will increase the loan capacity for relocation loans but expressed disappointment that the request to recognize relocation loans as business loans rather than household loans was not included. Myung stated, "The request to convert relocation loans from household loans to business loans was not reflected. Additional measures are needed for smooth relocation and rapid project advancement."
Exclusion of Member Status Transfer and Floor Area Ratio Easing; Seoul Calls for Further Improvements
On the other hand, the easing of restrictions on member status transfer, which Seoul City had identified as a core demand for improving project performance and transaction conditions, was excluded from the measures. Seoul had requested a temporary three-year suspension of the restrictions on member status transfer for redevelopment and reconstruction projects in overheated speculative areas. The city believes that allowing transactions for members who find it difficult to participate in projects due to construction costs and shared expenses will accelerate project progress.
Additionally, the proposal to expand the floor area ratio for private redevelopment projects to 1.2 times the legal limit and adjustments to the mandatory ratio of rental housing in redevelopment projects were not reflected. Seoul City argues that enhancing the feasibility of redevelopment projects is key to expanding supply, given the lack of available land in the city, and these issues need further improvement.
Myung stated, "Core issues that directly impact project performance and transaction conditions were not reflected in this measure. Additional regulatory improvements are necessary to enhance the effects of housing supply expansion."
The adjustment of the purchase price for public contribution rental housing has been included in Seoul's demands. The city believes this will positively impact project performance and supply speed.
However, it insists that the application period should not be temporary. Myung emphasized, "It is not enough to start construction only until 2028; a consistent supply of housing must continue thereafter. Our request has been for ongoing easing of regulations."
Private Rental Financial Support Requires Tax and Residency Regulation Revisions
In the private rental sector, measures include expanding project financing guarantees, easing LTV for buyers of new housing, and relaxing loan regulations for purchasing properties slated for demolition. Seoul City positively evaluates the expansion of financial support but points out that if tax and residency requirements remain unchanged, the effects of expanding private rental supply may be limited.
Specifically, the easing of LTV for rental property buyers applies only to new housing, and if the comprehensive real estate tax remains applicable in regulated areas, the supply expansion effects may not be significant. Seoul City has requested a comprehensive review of tax and residency requirements, including the tax reform plan announced on August 3, from the perspective of market stability and housing mobility.
Prudence Required for Greenbelt and Yongsan Supply; Prioritize Urban Redevelopment
Seoul City emphasized the need for a cautious approach regarding the government's consideration of utilizing greenbelt areas and supplying public housing in the city. Since specific target areas for greenbelt release have not yet been disclosed, it is essential to fully consider Seoul's urban planning and housing conditions. The city also stated that there needs to be sufficient consultation before confirming candidate sites for urban public housing complex projects, especially in areas where Seoul has indicated the need for exclusion.
Regarding the Yongsan International Business District, the city highlighted that appropriate housing quantities, infrastructure expansion such as schools, and community acceptance must precede any development. It reiterated that housing development in Yongsan Children's Park is restricted under the special law for Yongsan Park, necessitating additional procedures such as legal amendments for actual housing supply.
Seoul City plans to continue demanding unreflected regulatory improvements while cooperating with the government. It expressed regret over the announcement of measures directly related to Seoul's housing policy without sufficient prior consultation.
Myung stated, "The supply policy for Seoul, which is the core of the South Korean housing market, cannot achieve results through the efforts of either the central government or Seoul City alone. It is difficult to expect substantial cooperation if requests for collaboration are made only after announcements without prior consultation in the policy formulation process."
* This article has been translated by AI.
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