Seoul calls on government to ease relocation loan rules, revamp 10 housing laws to boost urban redevelopment

The Seoul Metropolitan Government has submitted 10 legislative amendment proposals to the central government aimed at revitalizing urban renewal projects, amid President Lee Jae-myung's recent calls to accelerate housing supply and speed up redevelopment and reconstruction work.

Seoul announced Monday that it had forwarded the proposals, covering four areas: deregulation, improved project viability, timeline reduction and protection of residents' rights.

The city said easing restrictions on relocation loans is essential to keeping ground-breaking schedules on track. It called for raising the loan-to-value ratio cap on relocation loans from the current 40 percent — applied uniformly with general mortgage loans under the speculative overheating district designation — to 70 percent.

"Relocation funds are not money to buy a new home — they are project capital needed to ensure smooth relocation during construction," a Seoul city official said. "The regulation needs to be separated out so that projects can move forward."

The city also said restrictions on the transfer of association membership status, which it said constrain property rights and freeze transactions, should be eased.

Seoul argued that temporarily relaxing the membership transfer restriction for three years, and shifting the restriction trigger for small-scale renewal projects to after project implementation plan approval, would allow the required resident consent rate to be secured more quickly and enable smoother project execution.

To improve project viability, Seoul called for easing the mandatory rental housing provision ratio for private renewal projects and relaxing the statutory ceiling floor-area ratio by 1.2 times, establishing new grounds to exempt or ease park and green space requirements in housing development districts, and reducing the double-counting of rental housing in small-scale renewal project calculations. The city said the minimum rental housing ratio required to unlock higher floor-area ratios in redevelopment projects should be lowered from the current 50 percent to 30 percent, bringing it in line with the standard applied to reconstruction projects. It also said the rental housing calculation method, which it described as unnecessarily duplicative, should be revised to improve the economics of small-scale renewal projects.

To shorten project timelines, Seoul proposed lowering the consent threshold for redevelopment association formation, shortening the required notice period to landowners and property holders before an association formation application is filed, allowing integrated review to proceed ahead of minor amendments to improvement plans, and streamlining the process for selecting contractors and other service providers for associations. The proposal to lower the redevelopment consent threshold mirrors a government move — enacted through follow-up legislation — that reduced the reconstruction association formation consent requirement from 75 percent to 70 percent, and would apply the same standard to redevelopment projects.

Seoul also proposed improving standards for disclosing personal information in association member registries and clarifying the succession of permit and authorization conditions under the Multi-Family Housing Management Act, as part of efforts to rationalize renewal project operations.

The city said it hopes the amendments will be reflected in policy and lead to a significant expansion of housing supply in urban areas.

"Through meetings between the Seoul mayor and the Land Ministry minister and three working-level consultations held in November and December last year, we have continued to emphasize the need for deregulation and identify institutional improvements," a Seoul city official said. "We will keep working with the government to remove unreasonable regulations that make it difficult to push projects forward on the ground."