Seoul as seen from Namsan is full of apartments. /yunhap news
The government announced on the 4th a plan to supply 836,000 homes across the country for four years until 2025.
The Ministry of Land, Infrastructure and Transport said, “It is an extraordinary measure to stabilize the market overheating in the situation of exceptionally low interest rates and household division,” and emphasized that “we have reinforced the role of the person in charge of housing supply on the premise of thorough protection for the vulnerable.” The following are questions and answers regarding this supply plan prepared by the Ministry of Land, Infrastructure and Transport.
▶So far, the supply has been said to be sufficient, but the reason for the announcement of this measure is
“Even with the expansion of the supply base, there is a limit to responding to the unprecedented ultra-low interest rate and rapid increase in the number of households. While maintaining policy stances such as protection of real demand and eradication of speculative demand, high-quality housing at a price that can be afforded to an excellent location in the city center is provided. We announced this measure to provide enough supply.”
▶ The reason why we haven’t come up with a breakthrough urban supply plan
“We have already suggested a supply plan that utilizes idle land in the city center through the 12·16 measure, the 5·6 measure, and the 8·4 supply measure. · It is true that the use of semi-industrial areas was promoted as a pilot project. This is a special measure designed to stabilize the market overheating and significantly expand supply in the city center in the current unusual ultra-low interest rate and household division situation.”
▶Another point that differentiates it from the existing supply policy is
“Based on the premise of thorough protection for the vulnerable, the role of the person in charge of housing supply has been reinforced. The public-led development process allows the project to proceed quickly, while providing sufficient incentives to landowners, and sharing development profits within tenants and merchants. It is characterized by being able to prevent congestion and expand infrastructure.”
▶The reason why the public does not loosen regulations on private redevelopment and reconstruction
“The maintenance project is a project with strong publicity that affects urban planning and the residential environment. However, it has been used as an excessive investment target as development profits have been privatized as the owner-centered combination method has been conducted. In the past 20 years, no government has come up with a fundamental supply expansion plan in the past 20 years due to concerns and the lack of a means to redeem development profits.”
On the morning of the 4th, Minister of Land, Infrastructure and Transport Byun Chang-heum is giving a’briefing on plans to expand housing supply for 3080+ metropolitan areas’ in the auditorium of the annex of the government building in Jongno-gu, Seoul. /News 1
▶Isn’t propriety-based business promotion excessive infringement on private property?
“The public only implements the project when a landlord, etc. proposes a project and meets a high level of resident consent (2/3 of the residents, 1/2 of the area). In addition, the existing housing site project does not stipulate the consent requirement when accepting it. This time, considering that it is a business in the city center, we introduced the consent requirement. If you do not want to promote the fast-track business of this acceptance method, you can also promote the existing business.”
▶It takes a long time for the quantity to be actually supplied, but is it difficult to respond to the current overheated market situation?
“If there is confidence that enough supplies in the market will continue to be supplied at low prices, we expect to receive new low-cost subscriptions that are subject to the pre-sale price limit, rather than buying a house right now.”
▶I am concerned about an increase in house prices due to development projects
“If development expectations are formed, there may be concerns about a short-term price increase. However, in order to block the inflow of speculative demand, priority is given to those who have signed a new purchase contract for existing real estate in the business area or if they have split their shares in order to block the inflow of speculative demand. We plan to pay cash liquidation without doing so. We will closely monitor the market situation, and if there is a concern about overheating, we will thoroughly block the possibility of overheating, such as designating a land transaction permission zone and excluding it from the development target area.”
▶ Would the jeonse market become more unstable due to the increase in the loss of existing houses and the concentration of relocation demand due to the simultaneous promotion of multiple development projects?
“In the early days of the system, we plan to adjust the relocation period for each business site, and implement a circulation maintenance using neighboring purchases and leases and housing sites in the metropolitan area. In the period of establishment of the system, temporary residences will be prepared through sequential links between development projects.”
▶ How to promote landlord agreement to increase the possibility of realizing supply in the city?
“More than 50% of the volume of the volume through this measure is supplied through maintenance projects and utilization of available urban areas such as station areas, semi-industrial areas, and low-rise residential areas. The maintenance business guarantees additional profits to members than the previous method, and increases business uncertainty. Various incentives such as reduction were included.”
▶ Will development profits be privatized due to deregulation?
“Development profits guarantee appropriate returns (existing expected rate of return + 10 to 30% points) to owners of land, etc. The rest is reinvested in tenants protection, public lease and supply by public enterprises, living SOC expansion, and low business feasibility areas. Land, etc. It is different from the existing maintenance project in which the union consisting of the owners of the project becomes the project implementer and monopolizes the development profits. In addition, even if the public is jointly implemented with the private sector, the private business operator is limited by the private investment ratio limit and the rate of return (IRR) limit. It allows only limited revenue.”
▶What role do private construction companies and developers play?
“As the overwhelming amount of houses will be supplied according to this measure, it can be seen that business opportunities for private construction companies and developers will be expanded. In particular, unlike the previous public-led projects, this measure included various private participation measures. In particular, the newly introduced small-scale redevelopment and small-scale housing maintenance management areas can propose projects by discovering excellent locations in underdeveloped downtown areas, and in principle, implement private independent projects. As such, active private participation is expected in the future.
▶ What are the measures to protect indigenous peoples and tenants that are strengthened by the public-led development project?
“We will induce resettlement by giving land owners the right to supply new apartments in the future. We will adopt a method of prepaying the price of new apartments to be borne as existing assets and then settling (transfer tax non-taxation). Real residents who do not have the ability to bear development costs. It also provides customized support, such as providing public self-householding and loan support to landlords who have a high burden of returning multi-family and multi-family lease money.”
▶There is a fear that the supply of public rental housing will retreat
“This measure focuses on public pre-sale considering that there are many consumers who want to prepare my own house in the market, but public rental housing is also planned to be mixed with public self-owned housing. Through the added floor area ratio, 1.5 times the previous number of households (redevelopment is not possible) 1.3 times) Guaranteed housing increase, and the total supply of rental housing is expected to increase compared to the existing supply method.”
▶Is there any fear of difficult development due to the introduction of various new businesses?
“The new business structures announced through this measure are all designed by the Ministry of Land, Infrastructure, or local governments to be implemented directly by the public, or to support private projects under preliminary plans, so it is possible to prevent difficult development.”
▶Wouldn’t the increase in new housing supply increase the burden of increasing debt for public companies (LH·SH)?
“In this supply model, the owners of land, such as those who agree to the project, pay in kind in advance and are compensated with the right to sell new apartments first, so the cost of securing the land will be less than that of other projects. The initial project cost is necessary for such purposes, but the debt burden on the public corporation will not be large as it can be preserved through sales proceeds.”
▶Urban planning authority is under the jurisdiction of local governments, but how to cooperate with Seoul city.
“The project proposed in this countermeasure is designed to allow local governments to participate in the overall project, so that the municipal planning authority of the local government is sufficiently protected. We have prepared a countermeasure in cooperation with the Seoul Metropolitan Government, and we will work closely with the Seoul city to visualize the project results early after the plan is announced. “
▶ Housing is mainly supplied to the metropolitan area. What are the special measures for the non-metropolitan area?
“This measure focused on supplying housing in the metropolitan area. This is to overcome the spread of anxiety sentiment arising from concerns about the shortage of housing supply in Seoul and the metropolitan area. However, various housing supply plans that have been implemented only in Seoul and metropolitan areas have been implemented so far. In addition, in the housing new deal plan to be announced later, multifunctional rental housing that links housing, social services, innovative spaces, and jobs will be supplied mainly to non-metropolitan areas.”
Ahn Hye-won, Hankyung.com reporter [email protected]