[O Sehun Administration Real Estate Policy] <2> Expansion of New Town Redesignation... Cooperation Between Government and City Council Essential

Obstacles to Zoning Designation Likely to Start with 'Abolition of Residential Maintenance Index'
Must Go Through Dokaewi Deliberation
Relaxation of Designation Criteria Requires Ordinance Amendment... Must Pass City Council

Seoul Mayor Oh Se-hoon is attending the Cabinet meeting held via video at the Government Seoul Office in Jongno-gu, Seoul, on the morning of the 13th. Photo by Hyunmin Kim kimhyun81@

[Asia Economy Reporter Kim Hyemin] The ‘Redevelopment Promotion District (New Town)’ is a sore spot for Seoul Mayor Oh Se-hoon. In 2006, he made an ambitious pledge to expand the New Town project to 50 districts, but during his term, only one district (Sewoon District) was designated. This was due to the real estate market slump caused by the 2008 global financial crisis. Afterward, Park Won-soon, who took office as mayor in 2011, pursued an exit strategy for New Towns and revoked the designation of many districts.

With Mayor Oh returning to office after 10 years, expectations are rising that he will resume designating redevelopment zones. During the by-election period, Mayor Oh already stated in a media interview, "I will restore everything to its original state." He has also pledged to relax the criteria to re-designate previously revoked zones and abolish the Residential Maintenance Index to activate new zone designations.

During the nine years under Mayor Park, 394 out of a total of 683 New Town, redevelopment, and reconstruction zones were revoked. Excluding zones automatically revoked under the sunset clause, as of August last year, there were 176 zones. Among these, 145 zones (82%) are located in northern districts such as Gangbuk-gu, Nowon-gu, and Dobong-gu. However, since 2015 for redevelopment and 2018 for reconstruction, there has not been a single new designation. This has been cited as a major cause of the housing supply shortage in Seoul.

The biggest reason for the lack of new zone designations has been pointed out as the excessively stringent designation criteria. The most representative is the ‘Residential Maintenance Index.’ In 2015, Seoul established the ‘2025 Urban and Residential Environment Maintenance Basic Plan’ and introduced the ‘Residential Maintenance Index,’ which has stricter standards than the Urban and Residential Environment Maintenance Act (UREMA) enforcement decree and ordinances. Before 2015, only three physical conditions such as aging and infrastructure had to be met, but the criteria were strengthened to require a comprehensive evaluation of 11 items to be designated as a new maintenance zone. Not only physical conditions but also socioeconomic factors and residents’ willingness were considered.

Mayor Oh plans to virtually abolish the Residential Maintenance Index to increase new maintenance zone designations. The timing is also appropriate. Seoul plans to establish the ‘2030 Urban and Residential Environment Maintenance Basic Plan’ this year, which is expected to include the deletion of the Residential Maintenance Index.

However, like other supply policies, it is difficult for Mayor Oh to handle this alone. The ‘2030 Urban and Residential Environment Maintenance Basic Plan,’ which includes the abolition of the Residential Maintenance Index, must go through the Urban Planning Committee review, where external experts hold the majority. Although the mayor has the authority to appoint Urban Planning Committee members, he does not have the power to dismiss them. The members have a guaranteed two-year term, and only two of the 30 members’ terms will end in August. The committee’s composition cannot be arbitrarily changed to fit Mayor Oh’s policy direction.

Additionally, the designation criteria for maintenance zones are stipulated in the ‘Urban and Residential Environment Maintenance Ordinance,’ and relaxing these requires approval from the City Council. This means coordination with the City Council, where the ruling party holds an overwhelming majority, is necessary.

Professor Seo Jin-hyung of Gyeongin Women’s University said, "Especially for large-scale redevelopment projects like New Towns, there are limits to pursuing them solely by the Seoul city government. Cooperation with the central government and the City Council is essential," adding, "Although the mayor will propose deregulation of redevelopment and reconstruction using his authority during his short term, the results cannot be guaranteed."