To speed up the supply of dwellings, the Seoul Metropolitan Government on the 15th proposed to the central government easing regulations on relocation loans for private redevelopment and reconstruction business sites and lowering the ratio of rental housing.
Seoul proposed expanding the relocation loans for association members, which are currently subject to a loan-to-value (LTV) ratio of 40%, to 70%. Most areas of Seoul are designated as overheated speculation zones, so association members are applying the same LTV 40% for relocation loans as for mortgage loans. Seoul said, "Relocation funds are not money to buy a new home but essential project capital to ensure smooth relocation during the construction period," adding, "We need to separate out the regulations and give the project momentum."
Seoul also asked the government to relax for three years the restrictions on transferring association membership status. The transfer restriction is enforced to block speculative forces from entering and driving up home prices. In overheated speculation zones, reconstruction bans transfers of membership through sales or gifts after approval of association establishment, and redevelopment bans them after approval of the management and disposal plan.
Seoul said some landlords find it hard to leave with only cash settlements, or, in the course of the maintenance project, cannot secure loans and therefore cannot bear additional charges, so even if an association member wants to sell an occupancy right and leave, they cannot, and this needs to be resolved.
Seoul also demanded the application of various incentives that can enhance the business viability of redevelopment and reconstruction. It called for expanding to private maintenance projects the benefit of "relaxing the statutory maximum floor area ratio," which currently applies only to public maintenance projects, and for lowering the rental housing ratio (50%) imposed when easing the floor area ratio for redevelopment to the reconstruction level (30% of the eased floor area ratio).
In the case of small-scale dwelling maintenance projects, to build up to the statutory maximum floor area ratio, 20% of the total number of households must be secured as rental housing. Seoul also requested revision of the Special Act on Empty Houses and Small-Scale Dwelling Maintenance so that the public contribution (rental housing) due to a use upzoning is not double-counted.
Seoul also proposed measures to allow the downward adjustment of the consent rate for approval to establish reconstruction associations, changed to 75%→70% through follow-up legislation to the Sept. 7 real estate measures, to be applied to redevelopment as well, and to shorten the pre-notification period to residents before approval to establish an association from "60 days before the application date" to 30 days before.
Choi Jin-seok, head of Seoul's Housing Bureau, said, "Redevelopment and reconstruction are the most effective means to expand the supply of dwellings in the city center," adding, "We will continue to consult with the central government to improve unreasonable regulations that make it hard to push projects forward on the ground and to streamline procedures so that dwellings can be supplied more quickly."