Seoul Mayor Oh Se-hoon proposed easing regulations on private redevelopment projects, restoring the supply of private rental dwellings, and revamping the tax system as solutions to normalize Seoul's housing market.
The Seoul Metropolitan Government said on the 16th that it released the video "One-shot mayor, part 2: The real estate prescription delivered to the Lee Jae-myung administration, here's how to solve the real estate hell" on the mayor's official website and the Live Seoul social broadcast.
The video is a follow-up to the diagnosis of the Seoul real estate market released the day before and lays out the government's policy shift to expand the supply of dwellings along with the city's execution plan.
Oh said speculative demand should be curbed, but regulations that block the supply of dwellings must be eased, calling for a shift in real estate policy from demand suppression to supply expansion.
As the first measure, he proposed invigorating private redevelopment projects. The city says that because the private sector supplied about 92% of the dwellings completed in Seoul over the past three years, the profitability of private redevelopment and reconstruction projects needs to be raised.
To that end, it asked the government to raise the loan-to-value (LTV) ratio for relocation loans in redevelopment projects to 70% and to temporarily ease, for three years, restrictions on transferring the status of members in redevelopment and reconstruction associations.
It also suggested easing the legal maximum floor area ratio for private redevelopment projects by up to 1.2 times and adjusting the share of rental dwellings required in redevelopment from the current 50% to 30%, the same level as reconstruction.
According to the city, the average annual number of redevelopment project starts over the past five years was 15,000 units, about half of the previous five-year average of 29,000.
The second measure is to restore the supply of private rental dwellings. Seoul has 407,000 private rental dwellings, accounting for about 20% of all rental dwellings, and there are about 93,000 rental business owners.
The city said lending regulations on acquisition-type rental business owners and limits on excluding assets from the comprehensive real estate tax should be eased, and a corporate-type private rental business system should be introduced to draw long-term suppliers into the non-apartment rental market.
As the third measure, it proposed tax reforms to lower the tax burden on single-dwelling owners and long-term holders.
The city argued that the fair market value ratio for the comprehensive real estate tax should be kept at the current level and the special deduction for long-term holding should be maintained, while adjusting the tax bases for property tax and the comprehensive real estate tax to reflect inflation and rising dwelling prices.
According to the city, due to this year's rise in officially assessed prices, the comprehensive real estate tax burden for single-dwelling owners in Seoul is expected to increase 79% from a year earlier, with the number of payers rising 35%.
Separately from improvements to government systems, the city will also promote housing cost support for citizens without dwellings and expand the supply of dwellings.
Through the comprehensive measures for housing stability for citizens without dwellings released in March, it is supporting jeonse deposits, loan interest, and monthly rent, and has also laid the foundation to supply 130,000 public dwellings, including public sales and public rentals.
Including private redevelopment projects, the total supply of dwellings will be pursued with a goal of breaking ground on 310,000 units by 2031. The city will expand the Fast-Track Integrated Planning 2.0 to other redevelopment projects such as Moa Dwellings and will designate the second vice mayor for administration as the chief fairness acceleration officer to review delayed projects.
For resident conflicts over business methods such as associations and trusts, the city and district offices will support briefings and resident votes, and for construction cost disputes, they will deploy a dedicated center.
It will also push to shorten permitting review times using artificial intelligence (AI) and offer preferential interest rates on project cost loans for associations that move projects forward quickly.
Oh said, "While we wait for the government's decision, the city will first push forward with projects it can carry out," adding, "we will speed up on the ground so the supply of dwellings leads to actual groundbreaking and move-ins."