Ahead of Enforcement Penalty Imposition at Year-End
Lotte Castle Le West Converted to Office-tel Use
The first case of converting the use of residential lodging facilities (Saengsuk) to officetels in Seoul has emerged. 'Lotte Castle Le West' in Gangseo-gu changed its use to officetel after review by the Seoul Metropolitan Government. With the imposition of enforcement penalties on residential Saengsuk expected by the end of this year, attention is focused on whether this case will expand to other Saengsuk.
Perspective view of 'Lotte Castle Le West' in Magok-dong, Gangseo-gu, Seoul. (Provided by Lotte Construction)
On the 20th, Seoul held the 3rd Urban and Architectural Joint Committee's delegated subcommittee and announced on the 21st that it had approved the amendment of the 'Magok Urban Development Project District Unit Plan.' The main point is to include officetels in the permitted uses for the area around 767-4 and 5, Magok-dong, where Lotte Castle Le West is located.
Originally, this agenda was submitted to the Urban and Architectural Committee on the 24th of last month but was deferred. This was to change the parking lot securing standards according to the change in use. When changed to officetel, more parking spaces must be secured than when it was Saengsuk. Accordingly, Magok MICE PEV, the project implementer, planned to increase the number of parking spaces by utilizing vacant spaces in the Lotte Castle Le West parking lot and sharing the parking lot of commercial facilities, which are also managed nearby, during nighttime.
With the change of use from Saengsuk to officetel, the appraised value increased, and there is also a plan to contribute about 15 billion KRW as a public contribution in the form of donation and lease. This complex is being constructed near Magoknaru Station on Subway Line 9 and the Airport Railroad in the Magok district, consisting of 5 buildings with 6 basement floors to 15 above-ground floors and 876 units, and is scheduled for completion this month.
Saengsuk gained attention as an alternative to apartments after real estate regulations were strengthened in 2018. It was not considered a house under the Housing Act, so it was free from acquisition tax surcharges, comprehensive real estate tax, and resale restrictions. However, in 2021, the government announced that if used for actual residence or leased as a jeonse (long-term deposit lease) instead of lodging business, an enforcement penalty of 10% of the standard market value would be imposed, causing issues. Lotte Castle Le West was also one of the places where conflicts arose between the construction company and pre-sale buyers.
Interest is focused on whether cases of use change will increase following this decision. A Seoul city official explained, "There was a resident proposal to allow officetel use plans and to change the parking lot securing standards accordingly," adding, "We comprehensively reviewed the urban environment and regional conditions changes through an analysis of the current status of Saengsuk and officetels in the Magok district."
Meanwhile, according to the Ministry of Land, Infrastructure and Transport, there are 96,000 Saengsuk units approved for use before December 2021, when lodging business reporting obligations were specified. Among them, cases where the use was changed to officetel totaled 1,173 units in places such as Anyang-si, Gyeonggi Province, and Haeundae-gu, Busan.
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
