[Oh Se-hoon Administration Real Estate Policy] <1> Relaxation of 35 Floors is 'Possible', Floor Area Ratio Increase is a 'Challenge'

57% Public Support but No Allies for Seoul Mayor Oh Se-hoon
Initiates New Housing Supply Plan
Floor Area Ratio Increase Must Pass Seoul City Council Approval

On the fifth day of his inauguration, Seoul Mayor Oh Se-hoon is embarking on a new plan for housing supply. Mayor Oh promised to comprehensively review the urban regeneration framework established by former Mayor Park Won-soon over 3,180 days, normalize reconstruction and redevelopment, and revive long-term rental housing, aiming to supply a total of 380,000 households over five years. To this end, he has announced various pledges, including abolishing the 35-floor height restriction and easing reconstruction safety inspections. According to Seoul City on the 12th, Mayor Oh plans to assess the tasks of each department and bureau starting that day and establish concrete measures to implement key pledges. On the first day, a work report from the Housing Construction Headquarters is scheduled. This is interpreted as evidence that Mayor Oh views housing supply as the most urgent issue. We take a focused look at Mayor Oh's major real estate policy pledges by issue.

Oh Se-hoon, Mayor of Seoul / Photo by National Assembly Press Photographers Group

<1> Easing Reconstruction Floor Height and Floor Area Ratio Restrictions

The core of Mayor Oh's real estate supply measures is deregulation of the private sector. The top priority among these is abolishing the 35-floor height restriction on apartments and easing floor area ratio (FAR) limits. This is also the first challenge Mayor Oh must solve to expand housing supply.

To conclude, there are clear limits to what the Seoul mayor can do unilaterally. The key question will be whether the newly elected mayor, with 57% public support but no allies, and a term of one year and three months, can overcome the Seoul City Council controlled by the ruling party.

For now, the most feasible pledge is abolishing the 35-floor height restriction. This restriction is stipulated in the '2030 Seoul Plan,' the city's basic urban plan established by former Mayor Park in 2011, which limits the maximum height of apartments supplied in Seoul to 35 floors regardless of zoning. Since the Seoul Plan is decided by the Seoul City Urban Planning Committee, whose members are appointed by the mayor, it can be revised according to Mayor Oh's will. Although the Seoul City Council's opinion must be heard, the mayor is not obligated to reflect it. Furthermore, Park Young-sun, the Democratic Party candidate for Seoul mayor, also pledged to ease this restriction, so there is little justification for opposition from the council.

Moreover, the timing is favorable. The Seoul Basic Urban Plan is established on a 20-year basis and is to be revised every five years to reflect feasibility and changes in residential conditions. Seoul City plans to establish the '2040 Seoul Plan' this year. Mayor Oh is expected to ease the floor height restriction to a maximum of 50 floors in the new plan.

If deregulation is realized, housing supply in reconstruction complexes is expected to increase significantly. For example, if the Eonma Apartment Complex (4,424 households) in Daechi-dong, Gangnam-gu, Seoul, is reconstructed with 35 floors, it would have 5,905 households; with 49 floors, 6,054 households. Also, the Jugong 5 Complex in Jamsil-dong, Songpa-gu, could increase from 3,930 households to about 6,400 households if reconstructed with 50 floors.

Apartments in the Gangnam area of Seoul. Photo by Hyunmin Kim kimhyun81@

The problem lies in easing the floor area ratio. Mayor Oh pledged to raise the floor area ratio in residential areas of Seoul, which is set lower than the National Land Planning Act, as he sees it causing inefficiency in development. Seoul City ordinances regulate the floor area ratio for second-class general residential areas and third-class general residential areas at 200% and 250%, respectively, which are 50 percentage points lower than the National Land Planning Act.

However, easing the floor area ratio is beyond the Seoul mayor's unilateral authority. The same applies to abolishing the seven-floor height restriction in second-class general residential areas. These require amendments to ordinances by the Seoul City Council, which is controlled by the ruling party. Currently, the Seoul City Council consists of 101 seats held by the Democratic Party, accounting for 92% of the total 109 seats. Before the election, Mayor Oh confidently promised "deregulation within a week," but after winning, he took a step back, saying he would "proceed cautiously but swiftly." Given that Mayor Oh has about one year and three months left in his term, if cooperation with the city council is not achieved, normalizing reconstruction and redevelopment will be difficult.

Ham Young-jin, head of the Zigbang Big Data Lab, said, "While floor area ratio and similar issues can be addressed through amendments to Seoul City ordinances, many matters require amendments to the Urban and Residential Environment Improvement Act, such as the reconstruction excess profit recovery system. Therefore, it remains to be seen whether Mayor Oh's election will bring a revolutionary change to the reconstruction market landscape."