[6·17 Real Estate Measures] "Higher Safety Inspection Barriers"... Mixed Reactions Even Within Mokdong

Strengthened Standards Including On-Site Inspections
'Immediate Implementation' Brings Variables to Redevelopment Projects
Tension Before Adequacy Inspection at Mokdong 5·11 Complex
"Speed Delays and Inventory Complexes Expected"

[Asia Economy Reporter Yuri Kim] With the inclusion of measures to strengthen safety inspections in the June 17 real estate policy, the initial barriers to reconstruction projects have become higher. Some measures, such as including on-site investigations during the second-stage safety inspection by public institutions, have been implemented immediately, which is expected to create mixed outcomes even within the Mokdong New Town area, where safety inspections are currently a hot topic.

The key points of the "Measures to Strengthen Transparency and Fairness of Reconstruction Safety Inspections" within the "Housing Market Stabilization Management Plan" announced by the government on the 17th are as follows: the authority to select and manage the first-stage safety inspection (detailed safety inspection) contractors, which was previously under local governments, will be transferred to metropolitan city governors; the second-stage safety inspection (public institution adequacy inspection) will now mandatorily include on-site investigations, which were virtually absent before; and during the subsequent advisory process, the total scores for each review item will be kept confidential from advisory committee members to enable independent judgment. The transfer of authority for selecting first-stage safety inspection institutions can be implemented after the revision of the Urban and Residential Environment Improvement Act. The government aims to revise the law by the end of this year and implement it in the first half of next year. Industry insiders expect stricter evaluations as the detailed safety inspection contracts, previously managed by each district, will be handled by metropolitan cities, freeing them from resident complaints.

The second-stage safety inspection measures will be applied immediately to projects requesting the second-stage inspection after the policy announcement. As a result, some complexes in Mokdong New Town, where safety inspections are actively underway, will be subject to the strengthened standards right away. According to Yangcheon District Office, among the complexes that have passed the detailed safety inspection, nine are already undergoing the public institution adequacy inspection, five are in the process of consulting with related agencies before requesting the adequacy inspection, and eleven complexes that recently passed the detailed safety inspection are currently conducting document reviews before requesting the inspection. These complexes are expected to have on-site investigations added, which were not conducted in previous adequacy inspections. Furthermore, the adequacy inspection results will keep total scores confidential while advisory committee members independently review each item such as structural safety, aging, and residential environment. Recently, Mokdong Complex 6 passed both the detailed safety inspection and the adequacy inspection, raising expectations that other complexes under similar conditions would also pass, but this new variable has emerged. Except for Complex 6, which has already passed, and the nine complexes currently undergoing adequacy inspections, the results are now uncertain.

Mokdong is not the only area facing this sudden challenge. The calculation has become complicated for Olympic Village Apartments in Songpa-gu and Wolgye Siyeong (Miseong, Miryung, Samho 3rd Complex) in Nowon-gu, which were preparing to retake the detailed safety inspection. The Olympic Village Apartments, considered a "reconstruction dark horse" in the Gangnam area, received a C grade in last year's detailed safety inspection, halting reconstruction efforts, but have recently resumed efforts following successive passes in detailed safety inspections. Wolgye Siyeong failed the preliminary safety inspection by the district last year but was preparing to reapply recently. Additionally, Samho 4th Complex and Sanggye Jugong 6th Complex in Nowon-gu, and Godeok Jugong 9th Complex in Gangdong-gu were also preparing for safety inspections.

Industry insiders believe that the government's additional strengthening of reconstruction safety inspections will raise the entry barriers at the early stages of reconstruction projects, causing delays in project progress. In Seoul, where over 70% of last year's total housing supply was from redevelopment projects, concerns about supply shortages are expected to intensify. A redevelopment industry official said, "The 2018 strengthening of reconstruction safety inspection standards required 50% consideration of structural safety, which already raised the hurdle. Some projects with a D grade underwent additional public institution review but ultimately failed," adding, "The progress of early-stage reconstruction projects will slow down, and some complexes may reconsider pursuing reconstruction altogether."

The safety inspection, the first gateway before proceeding with reconstruction, is divided into three main stages: the district's preliminary safety inspection, the detailed safety inspection by specialized firms, and the adequacy inspection by public institutions. A determination that the building is aged and inconvenient enough to require reconstruction must be made through these inspections to proceed with reconstruction projects. If the detailed safety inspection results in grades A to C, only maintenance and repairs are allowed, and reconstruction is not permitted. A D grade allows conditional reconstruction after the public institution adequacy inspection. An E grade is classified as a confirmed reconstruction decision.