Supply of 107,000 Public Rental Housing Units Within the Year
Activation of Redevelopment Projects and Swift Promotion of the Revised Reinvestment Tax Act
The government has decided to provide comprehensive real estate tax (종합부동산세) aggregation exemption benefits for registered rental housing with guaranteed public interest, even if the land and building owners are different. Additionally, it plans to supply 107,000 public rental housing units within the year and conduct tenant recruitment and move-in for about 38,000 public rental units in the second half of the year.
On the 4th, the government announced the '2023 Second Half Economic Policy Direction' containing these details.
First, for registered rental housing with public interest, the government will exclude the comprehensive real estate tax on attached land from aggregation even if the land and building owners differ, thereby reducing costs. This measure is interpreted as a response to the increased burden caused by the rise in housing prices, which has led to more rental housing exceeding the aggregation exemption criteria. Currently, the comprehensive real estate tax is apportioned and levied on each owner when the owners of the building and attached land differ. With this new measure, public rental housing will be exempt from aggregation regardless of the landowner, but for private rental housing, the exemption applies only if the landowner is a public housing operator or a REIT (public housing operator investor).
The government also plans to expand support for new rental housing supply models such as Seoul City's Win-Win Housing through public-private cooperation. The plan is to expand Win-Win Housing by providing comprehensive real estate tax aggregation exemption benefits on attached land for registered rental housing with public interest. Win-Win Housing refers to rental housing where non-homeowners can reside for up to 20 years at about 80% of the surrounding jeonse (long-term deposit lease) market price.
The government plans to supply 107,000 public rental housing units within the year and conduct tenant recruitment and move-in for approximately 38,000 public rental units in the second half of the year.
The third-phase new towns, where land compensation has been completed, will begin construction within the second half of the year, and the designation of housing sites and announcement of new candidate sites will be promptly pursued. Designation of housing sites and district plan approvals already announced, such as Hwaseong Jinan, will be advanced, and 150,000 new public housing units will be announced by the first half of next year.
To ensure smooth housing supply, improvements to systems related to redevelopment projects will also be pursued. In particular, the government plans to swiftly legislate amendments to the 'Special Act on Redevelopment and Support of Old Planned Cities' and the re-charging tax law to reduce reconstruction burdens.
Furthermore, special exceptions for trust companies in the implementation and operation of redevelopment projects will be allowed to shorten the project duration by 2 to 3 years compared to the existing association method. Allowing these exceptions enables trust companies to simultaneously establish redevelopment zone designation proposals, redevelopment plans, and project plans, accelerating project progress compared to the association method.
The government will rationalize the system by clarifying local governments' standards for redevelopment project donations and providing incentives proportional to the scale of donations. It will also promote public participation-type small-scale redevelopment project candidate site contests and implement institutional improvements to revitalize projects.
Measures to revitalize the sales market will also be pursued. The government plans to promptly abolish the residency obligation applied to housing under the price ceiling system following the relaxation of resale restrictions on pre-sale rights through amendments to the Housing Act. Additionally, for young non-homeowners, the government will push for the approval of 76,000 public sale housing units in excellent locations such as the third-phase new towns within this year and expand pre-sale subscriptions from the initially planned 7,000 units in two rounds to 10,000 units in three rounds (within the metropolitan area by year-end).
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