Public Reconstruction Donation Contribution Raised to 40~70%... Passed by Land, Infrastructure and Transport Committee Subcommittee

[Image source=Yonhap News]

[Asia Economy Reporter Kangwook Cho] A bill to amend laws for the introduction of public redevelopment and reconstruction has passed the National Assembly Land, Infrastructure and Transport Committee's bill review subcommittee. The minimum donation ratio for public reconstruction has been lowered from the existing 50% to 40%.

According to the National Assembly and the Ministry of Land, Infrastructure and Transport on the 23rd, the amendment to the "Act on Maintenance and Improvement of Urban Areas and Dwelling Conditions," which was proposed by Representative Junho Cheon of the Democratic Party of Korea, passed at the Land Law Bill Review Subcommittee held that day.

This bill mainly introduces public redevelopment and reconstruction announced by the government last year. Public redevelopment was presented in the May 6 measures last year, and public reconstruction was proposed in the August 4 measures. Public institutions such as the Korea Land and Housing Corporation (LH) participate in the implementation, increasing the floor area ratio and, in return, receiving a certain percentage as a donation in the form of rental housing, etc.

Public redevelopment provides incentives up to 120% of the legal floor area ratio and requires donating 20-50% of the increased floor area ratio by building housing of national housing scale. Although it is not subject to the price ceiling system, a maximum residence obligation period of 5 years and a resale restriction period of up to 10 years apply to the buyers. The Ministry of Land, Infrastructure and Transport plans to set the residence obligation and resale restriction periods through enforcement ordinances.

Public reconstruction increases the floor area ratio up to 500%, but requires recovering 40-70% of the increased floor area ratio as a donation. Initially, the donation ratio was 50-70%, but it was lowered during the bill review process due to opinions that it was somewhat excessive.

In the case of public redevelopment, eight pilot project sites were already selected last month. Establishing a legal basis for public redevelopment was an urgent task for the stable promotion of the project.

The amendment is now only awaiting passage by the Legislation and Judiciary Committee on the 25th and the plenary session on the 26th.