There is a standoff between prospective residents and Changwon City over the change of use for a "residential lodging facility" in Sangnam-dong, Seongsan-gu, Changwon-si, Gyeongnam, which is scheduled for completion in October.
On the morning of August 18, prospective residents who purchased units in Hillstate Changwon Central, a residential lodging facility, held a press conference at the Changwon City Hall press center, demanding that the city authorities allow the conversion of their units to officetel status.
Residents scheduled to move into the "residential lodging facility" Hillstate Changwon Central in Sangnam-dong, Seongsan-gu, Changwon-si, Gyeongnam, are holding a press conference urging the Changwon city authorities to convert the facility's use to officetel. Photo by Lee Seryung
They stated, "According to the Ministry of Land, Infrastructure and Transport's administrative support plan for the legal residential use of residential lodging facilities announced last October, the change of use to officetel must be completed by September this year. However, the current system and excessive financial burdens imposed by Changwon City have delayed the conversion process and now put it at risk of being abandoned altogether."
They further criticized Changwon City, saying, "The city is applying parking lot installation standards that are three times stricter than those of other local governments nationwide, and is demanding a conditional donation in the form of 15% of the land value as a prerequisite for permitting the change of use."
They pointed out, "Changwon City is the only place in the country where the parking installation standard is set at one space per 75 square meters of facility area. If this standard is applied, each household would require 2.28 parking spaces, but currently, only 1.72 spaces per household have been secured. As a result, the prospective residents must bear the cost for the shortfall of 141 parking spaces."
Residents scheduled to move into the "Residential Accommodation" Hillstate Changwon Central in Sangnam-dong, Seongsan-gu, Changwon-si, Gyeongnam, are holding signs urging the change of use to officetel. Photo by Lee Seryung
The prospective residents also argued, "Currently, residential lodging facilities are subject to loan restrictions from all financial institutions and are considered illegal buildings for residential use, with an annual enforcement fine of up to 10% of the publicly announced property value if used as a residence. Nevertheless, the Changwon facility was approved for sale as a high-priced lodging facility at the end of November 2021, after passing architectural review in 2016 and obtaining a building permit in 2017."
They expressed concern, stating, "If the administrative procedures for the change of use continue to be delayed and the required consent rate for sharing conversion costs is not met, the conversion to officetel will not be possible by the September deadline. This will result in an inability to secure loans from financial institutions and pay the remaining balance, leading both the developer and buyers to bankruptcy."
The prospective residents pointed out that conflicts are intensifying across the country due to the arbitrary interpretation of the Ministry of Land, Infrastructure and Transport's policy to encourage the change of use by local governments.
They urged, "Through consultations between local governments, the National Assembly, and the Ministry of Land, Infrastructure and Transport, guidelines should be established to apply national average standards for parking and conditional donations. Administrative procedures should be streamlined and support measures provided so that the conversion to officetel can be completed within the deadline, ensuring residential stability for buyers."
Residents scheduled to move into the "residential lodging facility" Hillstate Changwon Central in Sangnam-dong, Seongsan-gu, Changwon-si, Gyeongnam, are holding a rally urging the change of use to officetel. Photo by Lee Seryung
That afternoon, the group held a protest on the sidewalk in front of Gisan Paradise in Jungang-dong, Seongsan-gu, Changwon-si, condemning the city and stating, "We cannot bear the demand for a conditional donation worth 12 billion won and the cost of installing parking spaces. We purchased these units based on the developer's claim that residential use was possible, not with the intention of violating the law."
Afterwards, they submitted a proposal to Representative Heo Seongmu of the Democratic Party of Korea, who represents the district, calling for nationwide measures to allow legal residential use of residential lodging facilities and administrative action by local governments to permit conversion to officetel.
Residential lodging facilities are classified as commercial buildings under the Building Act and as lodging facilities under the Public Health Control Act, making residential use impossible. However, after registering as a business, they can be used for both short- and long-term stays, as well as cooking and laundry, similar to hotels.
However, as more people began using these facilities for residential purposes like apartments or officetels, the government revised the Enforcement Decree of the Building Act to require registration as lodging businesses, restrict residential use, and provide a grace period for conversion. If the facility is not registered as a lodging business, an annual enforcement fine of 10% of the officially announced property value is imposed.
Hillsstate Changwon Central, a "residential lodging facility" in Sangnam-dong, Seongsan-gu, Changwon-si, Gyeongnam, scheduled for completion in October 2025. Photo by Se Ryeong Lee
After the press conference, Changwon City issued a statement saying, "At the time of the sales report for the facility on November 19, 2021, the developer was instructed to specify in the sales advertisement that residential use was not permitted and was informed of the obligation to provide guidance on the use as a commercial lodging facility and to submit a consent form for lodging business registration at the time of contract."
The city further explained, "In order to change the use of a residential lodging facility to officetel, the permitted uses under the district unit plan and the parking lot installation standards must be met. Taking into account fairness with existing officetels and the parking shortage in commercial areas, we are preparing an exit strategy that will allow the change of use if an appropriate cost is borne."
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