If you leave it to the public for reconstruction, you will be subtracted from re-invitation… Cooperative development profit and autonomy’shrink’
Priority supply right’double-edged sword’… Blocking speculative demand vs. property rights infringement and decline in consent rate
[서울=뉴스핌] Reporter Kim Seong-soo = Although the government has announced that it is exempting the reconstruction excess profit return system (re-return) for public maintenance projects, it is pointed out that participation in Gangnam reconstruction will be limited. The public maintenance project method reduces the autonomy of the union, and the development profits to the members are less than that of the private initiative.
In addition, since new buyers cannot receive priority supply rights (occupancy rights), existing owners cannot sell their homes, thereby limiting the exercise of property rights. It is analyzed that the government needs to stipulate relevant regulations as soon as possible to increase the predictability of public maintenance projects.
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| [서울=뉴스핌] Reporter Sungsoo Kim = 2021.02.03 [email protected] |
◆ If you leave the reconstruction to the public, it will be subtracted from the re-recruitment… Cooperative development profit and autonomy’shrink’
According to the real estate industry on the 5th, experts said, “Although the government has announced that it is exempt from re-invitation of public maintenance projects, reconstruction complexes in the Gangnam area will still be lukewarm to participate.”
The government announced that the re-return is exempted if the public directly executes the project in the’Remarkable Expansion Plan for Housing Supply in Large City Areas’ announced jointly by relevant ministries (2 and 4 measures). .
The public direct implementation maintenance project is the public entrusted process of redevelopment and reconstruction led by private associations. Where there is an existing cooperative, a maintenance project is implemented by a public company at the request of a majority of the union members. Where there is no association, you can apply with the consent of a majority of the owners, such as land, and obtain consent of at least two-thirds within a year.
If a business is carried out in this way, administrative procedures such as the general assembly of the union or approval of management disposition are omitted, and the local government’s integrated deliberation is applied. In this case, the government explained that the maintenance project that previously took 13 years or more will be completed within 5 years.
Instead of carrying out the project directly by the public, re-invitation is exempted, which greatly improves business feasibility. As the union is dissolved, there is no obligation to reside for two years as a member of the reconstruction union.
However, there are drawbacks to the direct public maintenance project. If public institutions such as Korea Land and Housing Corporation (LH) and Seoul Housing and Urban Corporation (SH) take charge of project implementation, the union must pay a fee. In this case, the development profits to be returned to members will be reduced rather than the private sector.
In the case of’Seongnam-type public redevelopment’, which was previously conducted through public-led redevelopment, general management expenses, such as employee labor costs, and construction overhead expenses were levied at 4% or less of the total LH project cost. Assuming that the project cost is 100 billion won and the commission rate is 4%, it means that you have to pay 4 billion won as a commission.
Seongnam-type public redevelopment is a project promoted by LH and Seongnam City to improve the residential environment in the old city of Seongnam. Redevelopment projects in Jungwon-gu, Seongnam-si, Jung-dong District 3 and Dandae-gu, Sujeong-gu were operated in this manner.
In addition, public maintenance projects greatly reduce the autonomy of the union. This is because there are many issues that the private and public must coordinate with the operation of rental housing types and arrangements, calculation of pre-sale prices, architectural design and opening of donation facilities. In addition to the selection of the construction brand, the association must transfer most of the decision rights to the public.
“As the Gangnam reconstruction complex places great importance on the autonomy of the union and the high-end of the business, the participation rate in direct public maintenance projects may be limited,” said Ham Young-jin, head of Jikbang Big Data Lab. “It is necessary to stipulate and establish a successful business model to increase the predictability of the business.”
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◆ Priority supply right’double-edged sword’… Blocking speculative demand vs. property rights infringement and decline in consent rate
Regulations related to the’priority supply right’ (the right to move in) can also become a’double-edged sword’ in the housing market. It may have the effect of partially blocking demand for speculation, but on the other hand, it may make it difficult to exercise property rights through the sale of houses.
According to the second and fourth measures, those who have signed a contract to purchase new real estate in the business area such as public redevelopment after the date of the announcement of the measures will not receive priority supply rights.
The government’s ambitious pursuit of public redevelopment led to the rush of investment demand and the price of multi-family and coalition (villa) houses soared. In this case, it means that new investors will not be given the right to move in.
In addition, even if there is a change in rights such as division or separate ownership of real estate after the date of the announcement of the measures, priority supply rights are not received. For example, in the case of splitting the stake by constructing a detached house or an empty site into multiple households, the priority supply right does not come out from the building permit after the date of the announcement of the measures.
In principle, the priority supply right is to supply one house for one household. In the case of a shared stake, it is supplied to only one representative. Priority supply rights cannot be resold until the transfer of ownership is registered.
Priority supply targets and those belonging to their households are prohibited from applying for pre-sale of members for priority supply and maintenance projects in the overheated dumping district within 5 years from the date of the priority supply contract. Other general reconstruction and redevelopment members are also unable to apply for sale.
According to the analysis, the’priority supply right’ regulation has the effect of blocking speculative demand for the area. This is because investors do not have a reason to buy real estate in the business area if they do not receive the right to supply.
The problem is that the exercise of property rights through the sale of houses can become difficult. For example, when a business is prolonged for an unexpected reason, the existing owner may have to dispose of the house in a hurry. At this time, the new buyer does not receive the right to occupy and is liquidated in cash, so no one will buy the house.
Lee Eun-hyung, a senior researcher at the Korea Institute for Construction Policy, said, “No one will buy a house that is subject to cash settlement because we don’t know how long it will be possible to live,” he said.
In addition, the decline in the consent rate of owners such as land may cause difficulties in promoting the project. As the criteria for receiving the right to occupy (priority supply) become more stringent, the incentives for landowners to participate in the project decrease.
“In the case of urban public housing complex projects or public maintenance projects, it is possible to propose district designation with the consent of 10% of the owners of land,” he said. “However, if you do not receive the consent of more than two-thirds of the owners of land within one year, The projected district will be released,” he said.
He added, “If the government does not give new buyers the right to move in to control speculation and liquidates in cash, they are likely not to agree to the maintenance project,” he added. “In this case, it may be an obstacle to the progress of the project.”
Ji-young Yang, head of R&C R&C Research Center, said, “This measure is positive in that it gave benefits such as incentives to the area if the public led the project implementation,” he said.