"Public and General Two-Track Housing Supply Activation" Seoul City Maintains 15% Rental Obligation for Redevelopment

'Redevelopment Rental' Maintained at 15%, Autonomous District Discretion Increased from 5% to 10%... "Redevelopment Within Maximum 25%"
"Considering Smooth Housing Supply, etc."... 5% Mandatory Rental Housing Ratio Added to Commercial Areas

Archive photo / Photo by Mun Ho-nam munonam@

[Asia Economy Reporter Yuri Kim] The Seoul Metropolitan Government will maintain the mandatory rental housing ratio for redevelopment projects at 15%. However, the discretion of autonomous districts has been increased by 5 percentage points from the existing 5% to 10%, allowing the mandatory rental housing ratio to be determined within a maximum of 25%. This decision is analyzed to have been made considering the feasibility of redevelopment projects to ensure smooth housing supply.

On the 24th, Seoul announced the 'Rental Housing and Construction Ratio by Housing Size in Redevelopment Projects' containing these details.

Previously, with the revision of the Enforcement Decree of the Urban and Residential Environment Improvement Act, the mandatory rental housing ratio for redevelopment was raised by autonomous district. In Seoul, it was increased from 10-15% to 10-20%, and in Gyeonggi and Incheon, from 5-15% to 5-20%. The rental housing ratio that autonomous districts can additionally increase at their discretion also rose from 5% to 10%. Accordingly, Seoul could expand the redevelopment rental housing ratio up to 30% through ordinances.

However, Seoul decided to maintain the mandatory rental housing ratio at the existing 15%. Even if an autonomous district decides to build an additional 10% rental housing, the rental housing ratio will be a maximum of 25%, which is 5 percentage points higher than the current level. If the tenant ratio residing in the maintenance area is 15% or more, or if housing supply and demand stabilization is needed in the jurisdiction, the autonomous district can increase the rental housing ratio within 10%.

This decision is analyzed as a result of considering smooth housing supply within Seoul city. A Seoul city official also said, "Since housing supply activation is a common goal of the government and Seoul city, this aspect was reflected," and added, "When increasing the mandatory ratio, we also reviewed the decrease in general sales and changes in project feasibility before making the decision."

Meanwhile, a 5% mandatory rental housing ratio will also apply to commercial areas. Until now, commercial areas were excluded from the mandatory rental housing supply targets. The revision of the Enforcement Decree of the Urban Improvement Act will apply to projects that apply for project implementation approval from this day forward.

Accordingly, redevelopment projects that were on edge about whether the mandatory rental housing ratio would be raised have breathed a sigh of relief. Previously, to avoid the upper limit of the mandatory rental housing ratio, areas such as Hannam 2 District in Yongsan-gu and Heukseok 11 District in Dongjak-gu hastened their schedules by holding temporary general meetings.