Seoul City Proposes Legislative Amendments to Government to Speed Up Redevelopment and Reconstruction: 10 Key Tasks

▲ A view of a residential area in downtown Seoul seen from Namsan Mountain

The Seoul Metropolitan Government, which has been at odds with the Lee Jae-myung administration's real estate policies, has prepared and proposed specific legislative amendments to the central government to accelerate redevelopment and reconstruction projects and expand housing supply.

The Seoul city government announced that it has proposed a total of 10 tasks across four areas to the central government: easing real estate regulations, improving business feasibility, shortening project periods, and protecting residents' rights.

Regarding the proposal, Seoul City explained, "As President Lee Jae-myung recently emphasized 'expanding supply to stabilize real estate prices and increasing the speed of urban renewal projects,' the proposal was made to specifically suggest improvements and address obstacles that the city has directly identified on-site."

The proposal includes regulatory easing measures that Mayor Oh Se-hoon has repeatedly suggested during meetings with the Minister of Land, Infrastructure and Transport, as well as additional institutional improvements identified by the city.

Previously, Mayor Oh met with Land Minister Kim Yun-deok twice in November and December last year to emphasize the need for deregulation.

The Seoul Metropolitan Government proposed expanding relocation loans—which are currently subject to a 40% loan-to-value (LTV) limit, the same as general home mortgages, due to speculative over-heating zone designations—to 70%.

The rationale is that regulations should be eased because relocation funds are not intended for purchasing new homes, but are necessary capital to facilitate smooth relocation during the construction period.

According to the Seoul Metropolitan Government, since the tightening of relocation loan regulations, redevelopment, reconstruction, and Moa Town projects in Seoul have been struggling to secure relocation funds.

Even if additional loans are secured through payment guarantees from builders, residents must bear interest rates higher than those of commercial banks, and depending on the builder's financial condition, even this can be difficult.

The city also proposed easing restrictions on the transfer of association member status.

This is intended to temporarily allow the transfer of association member status for three years, and for small-scale urban renewal projects, to adjust the timing of transfer restrictions to after the approval of the business implementation plan, thereby quickly securing resident consent rates.

To improve business feasibility, the city proposed: ▲ easing the ratio of rental housing provided in private urban renewal projects and relaxing the legal upper limit of the floor area ratio (FAR) by 1.2 times; ▲ easing the double-counting of rental housing in small-scale housing redevelopment projects; and ▲ establishing grounds for exempting or relaxing standards for securing parks and green spaces in housing development districts.

Currently, benefits from FAR relaxation apply only to public urban renewal projects. The proposal suggests extending this to private projects to allow up to 120% of the legal upper limit of the FAR, while lowering the ratio of rental housing required to be built in exchange for the FAR relaxation.

The city also proposed improving standards so that apartment complexes within housing development districts that already have sufficient green space can be exempted from or see relaxed requirements for securing mandatory parks and green spaces during reconstruction.

In addition, under small-scale housing redevelopment projects, 20% of the total number of households must be secured as rental housing to build up to the legal upper limit of the FAR. The city requested a legal amendment to prevent public contribution rental housing, which must be built due to zoning upgrades, from being double-counted.

To shorten project periods, the city proposed: ▲ easing the consent rate required to establish redevelopment associations; ▲ shortening the notification period for landowners and other stakeholders before applying for association establishment approval; ▲ prioritizing integrated reviews for minor changes to urban renewal plans; and ▲ improving procedures for selecting builders and other partners for associations.

Following the announcement of the September 7 measures last year, the government lowered the consent rate required for establishing reconstruction associations from 75% to 70% through subsequent legislation.

Seoul City's view is that applying these relaxed standards to redevelopment as well as reconstruction will boost project momentum.

Additionally, the city requested that the advance notification period to inform residents before applying for association establishment approval be reduced from the current 60 days to 30 days. It also proposed allowing associations to enter into private contracts after a single failed competitive bidding process, rather than requiring two failed bids as is currently the case when selecting builders.

The Seoul Metropolitan Government also requested measures from the central government to protect residents' rights and prevent potential conflicts after project completion.

Specifically, the plan aims to prevent privacy violations by requiring that even if an association discloses its membership roster in accordance with the law, phone numbers should only be shared for those who have given prior consent.

The city also proposed amending the law to ensure that licensing conditions agreed upon with the city during the project process—such as opening public pedestrian pathways or community facilities—remain intact and are maintained even after the apartment complex is built.

Seoul City expects that if these proposals are reflected in government policies, regulations will be normalized, leading to shorter project periods, improved business feasibility, and a significant expansion of housing supply in downtown areas.

Choi Jin-seok, head of the Seoul Metropolitan Government's Housing Policy Office, said, "Redevelopment and reconstruction are the most effective means of expanding housing supply in downtown areas. We will continue to consult with the government to improve unreasonable regulations that hinder project progress on-site and rationalize procedures to ensure a more rapid housing supply."

(Photo: Yonhap News)

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