The National Federation of Reconstruction Maintenance Project Cooperatives (Jeon Jaeyeon) demanded that the government and the National Assembly abolish the Reconstruction Excess Profit Reclamation Act (Jaechohwan Act).
Jeon Jaeyeon said at a news conference on the 22nd at SETEC in Daechi-dong, Gangnam-gu, Seoul, that the Jaechohwan Act has become a major obstacle to the national housing policy, including disruptions to new dwellings supply, delays in renovating aging urban residential areas, excessive burdens on cooperative members, and a slowdown in the construction economy and the broader economy for ordinary people.
Jeon Jaeyeon said that while the government has rolled out a policy to supply 1.35 million dwellings in the greater Seoul area by 2030, the Jaechohwan Act, which structurally conflicts with this, is effectively halting reconstruction projects and blocking the dwellings supply pipeline.
The Jaechohwan Act is a system that recoups excess gains by imposing a levy on the excess when the average profit a reconstruction cooperative member earns through reconstruction exceeds a certain amount.
In the past, a levy was imposed if the average profit per cooperative member exceeded 30 million won. From Mar. 27, 2024, that threshold was raised to 80 million won.
Jeon Jaeyeon noted that reconstruction is not merely private development but simultaneously serves public functions such as expanding dwellings supply, ensuring urban safety, and improving aging residential areas, and pointed out that in the greater Seoul area alone, additional dwellings supply of at least 370,000 units to as many as 610,000 units is possible, but because of the Jaechohwan Act, a significant number of business sites have abandoned promotion or have been stuck for long periods.
Jeon Jaeyeon further said that the Jaechohwan Act levies are calculated based on unrealized gains, and the imposition rates and the timing of the assessment are set excessively, and assessed that even after the law was revised in Mar. 2024, the government and local governments have been unable to calculate and impose the levies, leaving the system inoperative administratively.
Jeon Jaeyeon consists of 80 reconstruction cooperatives nationwide, totaling about 64,000 units.