Lower Consent Thresholds and FAR Incentives... Easing Barriers for Small-Scale Redevelopment and Reconstruction

Consent Requirement for Association Establishment Eased from the 27th
Expanded Scope of Integrated Reviews to Take Effect

Areas densely packed with old, low-rise housing, where large-scale redevelopment and reconstruction have been difficult, will now be able to push ahead with urban renewal projects more easily. By lowering the required rate of resident consent for such projects and improving profitability through special construction exemptions, project implementation is expected to proceed more quickly.

The Ministry of Land, Infrastructure and Transport announced on February 25 that the amended “Special Act on the Maintenance and Improvement of Vacant Houses and Small-Scale Housing” and its subordinate statutes will come into full effect starting on February 27.

Small-scale housing maintenance projects are schemes that rapidly improve old, low-rise areas where large-scale redevelopment or reconstruction is difficult, by dividing them into small areas of less than 10,000 square meters. They are broadly classified into four types: self-governing housing maintenance, street housing maintenance, small-scale redevelopment, and small-scale reconstruction.

To facilitate swift development, the ministry has decided to lower the threshold for resident consent required for approval of association establishment. Going forward, the consent rates for street housing maintenance, small-scale reconstruction, and small-scale redevelopment will each be eased by 5 percentage points. For street housing maintenance and small-scale redevelopment, the requirement will be reduced from at least 80% to 75%, and for small-scale reconstruction, from at least 75% to 70%. For self-governing housing maintenance projects, where unanimous consent of all land and property owners had been required regardless of their number, the consent requirement for the residents’ association will be relaxed to at least 80% when there are more than five land and property owners.

The government also plans to grant special construction exemptions so that the supply of basic infrastructure such as roads and parks can proceed smoothly. When land adjacent to the project area, or land within the project area that includes vacant houses, is provided as sites for infrastructure or shared-use facilities, a new floor area ratio (FAR) exemption will allow construction up to 1.2 times the legal maximum FAR. In addition, the current building coverage ratio (BCR) exemption, which is limited to “street blocks located on sloped terrain,” will be expanded to apply to the “entire project area,” thereby easing the conditions for BCR exemptions.

The scope of integrated reviews will also be expanded. The items subject to review will be broadened from matters related to city and county management plans to include landscape reviews, educational environment assessments, and traffic and disaster impact assessments. Considering that separate reviews currently take at least four to six months, project implementation is expected to accelerate going forward.

In addition, the acquisition price for rental housing will be raised. Under the FAR exemption, the standard for the acquisition price of rental housing supplied by project implementers will be increased from “standard construction cost” to 80% of the “basic construction cost” (about 1.4 times the standard construction cost). The standard construction cost is the price used to calculate the accumulation rate for special repair reserves, and its appropriateness is reassessed every three years after notification, which has limited its ability to reflect rising construction costs.

Kim Youngguk, Head of the Housing Supply Promotion Headquarters at the Ministry of Land, Infrastructure and Transport, said, “With the enforcement of these amended laws and regulations, we expect to speed up the implementation of small-scale housing maintenance projects and improve their profitability,” adding, “We will continue to communicate with the field and improve the system to enhance deteriorated residential environments in city centers and promote housing supply.”