Easing the 70% Consent Rate Hurdle for Redevelopment Associations... Diverging Views Between Seoul City and the Ministry of Land [Real Estate AtoZ]

Lawmakers from Both Parties Propose Amendments to the Urban and Residential Environment Improvement Act
Maintenance Industry Calls for Unified Consent Rate for Redevelopment and Reconstruction Associations
Securing Additional Consent Above 70% Takes Significant Time
Ministry of Land Remains Cautious, Citing Ongoing Review and Potential Side Effects

The legislative process to lower the consent rate required by redevelopment project promotion committees to establish an association from 75% to 70% has officially begun. For reconstruction projects, this threshold was already eased to 70% last year. The move aims to accelerate redevelopment projects, which are considered to have greater public benefit and housing supply effects, and both Seoul City and lawmakers from both ruling and opposition parties have proposed similar amendments. However, the Ministry of Land, Infrastructure and Transport remains cautious, citing concerns about potential side effects.

Seoul Mayor Oh Se-hoon is holding a residents' meeting on December 10 last year at the Yeongdeungpo-gu Daerim 1 District Rapid Integrated Planning Redevelopment Promotion Zone. Provided by Seoul City

According to the maintenance industry, Um Tae-young, a lawmaker from the People Power Party who is a member of the National Assembly’s Land, Infrastructure and Transport Committee, and Chun Jun-ho, a lawmaker from the Democratic Party of Korea, have each proposed amendments to the Urban and Residential Environment Improvement Act to ease the consent rate for establishing redevelopment associations. The bills are currently under review and are expected to be presented at a full committee meeting as early as the first half of the year.

The proposed amendment to the Urban and Residential Environment Improvement Act would lower the consent rate required by redevelopment promotion committees to establish an association from 75% (three-quarters of landowners and other stakeholders) to 70%. Since January last year, the consent rate for forming associations in reconstruction projects has already been reduced to 70%. The higher rate for redevelopment projects has been cited as a factor slowing down the early stages of such projects.

Industry experts argue that, for fairness and public interest, the consent rate for redevelopment and reconstruction projects should be unified at 70%. An official from the Seoul City Maintenance Project Association stated, "Redevelopment projects supply more rental housing than reconstruction projects and are more effective in improving residential environments and expanding infrastructure. The impact on urban improvement is significant, and original residents are given the opportunity to move into apartments at a lower price than the general sale price through association member sales. There are also advantages such as public contributions in line with government policy, so the justification is sufficient."

According to Seoul City, as of January this year, there are 86 redevelopment zones in the pre-association stage. Of these, 63 have completed zone designation, and 13 have established promotion committees. There are also 10 zones where the promotion committee has existed for more than five years without progressing to the next stage. Areas such as Changsin 3, Yongdu 1-5, Sangbong 13, Sinjeong 3-1, and Yangpyeong 14 have remained at the promotion committee stage for several years.

The time required to secure the consent rate for establishing an association can range from a few months to more than five years. Once the rate exceeds 70%, it becomes increasingly difficult to secure additional consent. For example, in the Shindaebang Station area redevelopment, it took nine years from zone designation to association establishment. In response, Seoul City has been recommending that the Ministry of Land ease the consent rate for establishing redevelopment associations. The fact that stricter lending regulations implemented last year have made it harder for association members to secure financing is also cited as a factor hindering the process of securing consent.

A Seoul City official stated, "The consent rate for establishing a promotion committee is about 50%, so it is relatively easy, but the section between 70% and 75% required for forming an association is so difficult that it is called the 'steep pass.' We have proposed the legal amendment to the Ministry of Land, and since lawmakers from both parties have submitted bills, we are optimistic."

The Ministry of Land, Infrastructure and Transport, however, is reserved about amending the law. While lowering the threshold may help speed up the initial stages of projects, the ministry believes that if opposition among residents increases, it could actually delay projects. Unlike reconstruction, redevelopment allows for land expropriation, which imposes greater restrictions on property rights, so lowering the consent rate could intensify conflicts. In other words, while the start of projects might be quicker, it does not necessarily mean the completion will be faster. The reduction in opportunities for dissenting residents to express their opinions is also a concern.

A ministry official said, "We are still reviewing the proposed amendment, and lowering the consent rate is not necessarily the best solution. Securing a sufficient consent rate at the outset is essential for stable project progress." The official added, "Residents who oppose the project will eventually have to leave after receiving land compensation, and if the consent rate is lowered, more people may have to leave with lower compensation. It is better to persuade residents thoroughly before proceeding with the project."