As early as September, reconstruction and redevelopment apartments will not be able to obtain approval for management and disposal plans unless they hold public lotteries for rental housing. Until now, "prime complexes" in southern Seoul's Gangnam have chosen to increase contributed acceptance instead of holding lotteries for rental housing. Within the maintenance industry, there are voices of backlash questioning whether it is appropriate to mandate the so-called "social mix (mixed placement of for-sale and rental)" that assigns for-sale and rental homes without separation within an apartment complex.
According to the National Assembly on the 26th, the Democratic Party of Korea plans to convene a plenary session as early as this month to pass an "alternative bill to amend the Act on the Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents (Urban Maintenance Act)" that includes these provisions. The requirement for public lotteries for rental housing was included in an amendment to the Urban Maintenance Act proposed by Commissioner Lee Geon-tae of the Democratic Party, but after the Land Infrastructure and Transport Committee of the National Assembly on the 10th disposed of it with alternative adoption and discard (discarding a bill after reflecting some of its content in an alternative), it was reflected in an alternative proposed by Chairperson Maeng Sung-kyu of the Land Infrastructure and Transport Committee. The chairperson's alternative was referred to and passed by The National Assembly's Legislation and Judiciary Committee on the 11th, and only the plenary vote remains. A bill that passes the plenary session takes effect after a six-month grace period following presidential promulgation, with implementation expected after September.
The amendment proposed by Lee requires that the buildings, floors, and units of rental housing and dwellings sold to persons other than association members or owners of land, etc., be selected by public lottery, and stipulates penalties of up to three years in prison or up to 30 million won in fines for violations. However, during the standing committee review, the Ministry of Land, Infrastructure and Transport suggested that it would be more effective to have local governments refuse to approve management and disposal plans if public lotteries are not held, rather than creating new penalty provisions, thereby further tightening the regulation. This is also what the Ministry of Land, Infrastructure and Transport (MOLIT) released in the Sept. 7 real estate measures last year.
Among association members of complexes pursuing reconstruction and redevelopment, grumbling has already begun. On real estate forums, posts said, "If prime Han River view high-rise floors are allocated to rentals, there are major concerns about infringement of association members' property rights and a drop in general presale prices," and "Losses for the association will increase, undermining the business viability of reconstruction and redevelopment." Because home prices within the same complex can differ by hundreds of millions of won depending on whether they have a Han River view, the backlash is strong. In fact, for the 84-square-meter exclusive units at "Raemian One Bailey" in Seocho District, Seoul, asking prices can diverge by more than 2 billion won depending on whether they have a Han River view.
Conflicts over "rental housing with Han River views" are already surfacing in various places. In April last year, Jamsil Jugong Complex 5 in Songpa District received a design plan deferral at an integrated review by the Seoul Metropolitan Government on the grounds that it did not include rental housing on buildings and high floors along the Han River. The reconstruction association for Daechi Old Village District 3 in Gangnam District also sparked controversy by opting to increase contributed acceptance of 2 billion won in cash instead of adhering to the principle of public lotteries for rental housing. Earlier, the government introduced a public lottery system for rental housing through the enforcement decree of the Urban Maintenance Act in 2018. The Seoul Metropolitan Government also mandated rental housing placement without building or floor separation in 2021. However, at the direction of Mayor Oh Se-hoon for "flexible application," the city is allowing alternatives such as cash contributed acceptance.
Experts argue the government needs to craft a compromise. Park Hap-su, an adjunct professor at Konkuk University's Graduate School of Real Estate, said, "Because projects could be delayed over property rights infringement issues, slowing the supply of dwellings, the government needs to consider alternatives," adding, "If non-view units are allocated as rental housing, flexible alternatives should also be prepared, such as requiring the securing of additional rental housing supply by a certain ratio."