Seoul City Proposes Raising Standards for Landlord Housing Establishment to the Ministry of Land, Infrastructure and Transport

Raising Barriers for Cooperative Establishment and Tightening Collateral Loans
Allowing Landowners to Also Receive Allotments

Seoul City announced on the 27th that it has proposed an amendment to the Housing Act to the Ministry of Land, Infrastructure and Transport to raise the establishment threshold for local housing cooperatives (Jijutaek) and minimize member damages. This is a follow-up measure to the management plan released last week, which focused on distinguishing the quality of Jijutaek projects.

First, the city requested an increase in the required land ownership ratio for cooperative establishment. Under the current Housing Act, Jijutaek can be established by securing only 15% of the housing construction site. Because of this, many Jijutaek projects have suffered from the problem of having no essential land purchases for the actual project while spending project costs solely on service fees and promotional expenses.

The city also proposed banning collateral loans on a certain portion of cooperative land. This is because if the project is halted, the more land the cooperative has purchased, the greater the possibility that members can recover part of the costs they paid.

Additionally, the city suggested introducing requirements to allow owners of land without Jijutaek membership qualifications to receive allocations. Currently, only those who do not own a house, including the head of household and all household members, or only one person who owns one house under 85㎡ exclusive area can become cooperative members. The city explained that there are cases where securing land is difficult due to opposition from owners who cannot become members.

The city also requested revisions to the disqualification criteria for cooperative executives. Unlike redevelopment projects, Jijutaek executives retain their qualifications even if they are punished for failing to fulfill obligations stipulated by the Housing Act, such as information disclosure. Therefore, the city proposed to the Ministry of Land to add disqualification criteria for Jijutaek at the same level as redevelopment projects to ensure executives fulfill their duties.

Furthermore, the city recommended more detailed descriptions of the roles of Jijutaek business agents and trustees, as well as strengthening cooperative accounting audits.

Han Byung-yong, Director of Housing Policy, said, "We will vigorously implement matters that can be promoted independently while continuing to propose legal amendments. We will work to remove obstacles so that the burdens and damages of cooperative members in ongoing projects do not increase."