Kim Hyun-mi: "Floor Area Ratio is Public... Public Reconstruction Benefits Both Associations and the Public"

Minister of Land, Infrastructure and Transport Kim Hyun-mi is attending the 1st Real Estate Market Inspection Meeting of Related Ministers held at the Government Seoul Office in Jongno-gu, Seoul on the 5th. Photo by Moon Ho-nam munonam@

[Asia Economy Reporter Kang Nahum] Minister of Land, Infrastructure and Transport Kim Hyun-mi addressed criticisms that the public reconstruction plan presented in the August 4 real estate measures lacks sufficient incentives by stating, "Floor area ratio is public property," indicating that the incentives proposed by the government are adequate. Public reconstruction involves public institutions participating in reconstruction projects to increase speed and transparency, doubling the floor area ratio while the public sector recovers 50-70% of the increased floor area ratio.

Minister Kim appeared on Yonhap News TV on the 5th and said, "Public reconstruction is a business model where both the association and the public can benefit."

Currently, reconstruction associations are showing a negative attitude, arguing that the donation ratio and other conditions proposed by the government for public reconstruction are excessive and unprofitable. In response, Minister Kim said, "From the association's perspective, public reconstruction offers the advantages of faster speed and increased volume, while the government benefits by securing the increased volume to supply through public sales and public rental housing."

Regarding follow-up measures to the three lease laws, Minister Kim stated, "When the base interest rate was 2.5%, the monthly rent conversion rate was set at 4%, but now the base interest rate is 0.5%," adding, "Since there is a sevenfold difference, we will consider this and lower the monthly rent conversion rate."

Addressing concerns about traffic congestion due to large-scale housing supply, Minister Kim said, "When we announced the plan yesterday (the 4th), we also announced traffic measures for the relevant areas," adding, "Yesterday, the announcement focused on roads, but we will continue discussions with local governments and the Metropolitan Transportation Improvement Committee to resolve traffic issues and make these areas convenient for transportation."

Regarding concerns that the three lease laws might eliminate jeonse (key money deposit rental system), she said, "The reason jeonse is converting to monthly rent is because receiving monthly rent is more advantageous than bank interest, not due to the three lease laws," adding, "Especially in Gangnam, where 70% of jeonse is from gap investors, it will not be easy to switch to monthly rent requiring a large sum of money."

On the equity accumulation type sale housing system, Minister Kim explained, "It can help those who lack initial funds, such as first-time homebuyers, youth, and newlyweds," adding, "For a 500 million won house, you only need to pay about 100 million won initially and can pay the rest while living in the house."