Eunma faces W460m levy as Jamsil 5 awaits reconstruction surcharge notice

Tension is mounting across Seoul's major reconstruction complexes as the reconstruction excess profit recapture levy closes in on more projects. The Jamsil Jugong 5 complex in Songpa-gu has been confirmed to be undergoing a verification and supplementation review by the Korea Real Estate Board ahead of receiving its preliminary levy notice, while Eunma Apartments in Daechi-dong, Gangnam-gu has already been notified of an average levy of 463.34 million won ($345,000) per member and Banpo Hyundai in Seocho-gu has entered the formal assessment process.

According to Songpa-gu district office and other sources, Jamsil Jugong 5 — which received project implementation plan approval last July — is currently undergoing the Korea Real Estate Board's verification and supplementation process to calculate its preliminary recapture levy.

The recapture regime claws back a portion of excess profits from reconstruction projects — defined as gains remaining after subtracting normal housing price appreciation and development costs such as construction expenses. A progressive surcharge rate of 10 to 50 percent applies when the average excess profit per member exceeds 80 million won. Long-term single-home owners may receive a reduction of up to 70 percent depending on how long they have held the property.

"We are currently having the Korea Real Estate Board verify and supplement the recapture levy calculation for Jamsil Jugong 5," a Songpa-gu district office official said. "We plan to notify the association of the preliminary levy amount as soon as the verification is complete." The specific levy amount and notification date have not yet been finalized.

Jamsil Jugong 5 is pursuing a reconstruction project that would replace its current 3,930 units with up to 6,411 units across buildings of up to 65 stories. With a preliminary levy notice now coming into view for one of Gangnam's most prominent large-scale reconstruction sites — following Eunma — attention is spreading to other reconstruction projects in the area.

Earlier, the Eunma apartment reconstruction association received a preliminary recapture levy notice from Gangnam-gu district office putting the average charge at 463.34 million won per member. The total levy for the entire complex is estimated at around 2 trillion won. The notified amount is not the final levy, however — the actual payment will be confirmed after completion, reflecting final housing prices and project costs.

Meanwhile, data submitted by the Seoul Metropolitan Government to the office of People Power Party lawmaker Cho Eun-hee showed that as of August, 46 complexes in Seoul were expected to be subject to recapture levies, with a combined projected total of 2.17 trillion won. Of those, 25 were concentrated in the three Gangnam districts of Gangnam-gu, Seocho-gu and Songpa-gu.

By complex, Raemian Trinione — rebuilt from Zone 3 of the Banpo Jugong 1 complex in Seocho-gu — carried the highest projected levy at 514.9 billion won in total. Han River Mansion in Ichon-dong, Yongsan-gu followed at 472.2 billion won, and Singil Zone 10 in Yeongdeungpo-gu came in at 143.5 billion won. The estimated average levy per member was approximately 680 million won and 260 million won, respectively. Industry sources say the final recapture levy for Raemian Trinione could reach as much as 700 million won per household.

For complexes already completed, the formal levy process is becoming a reality. Seocho-gu plans to issue a pre-notice of the recapture levy to the Banpo Hyundai reconstruction association on Monday. The average levy per member at the complex, which was completed in 2021, is expected to be around 220 million won.

Seocho-gu plans to meet with the Ministry of Land, Infrastructure and Transport next week to again call for the abolition of the recapture regime. "At the meeting with the ministry, we plan to renew our call for abolishing the existing recapture system and submit additional petitions from residents," a Seocho-gu district office official said. "Separately, the pre-notice for Banpo Hyundai will proceed as scheduled, and the total levy amount will also be announced at that time."

By contrast, zones 1, 2 and 4 of the same Banpo Jugong 1 complex — which are pursuing reconstruction alongside Raemian Trinione's zone 3 — have been excluded from the recapture regime. Currently being rebuilt as "The H Banpo 124," zones 1, 2 and 4 filed for management and disposal plan approval on Dec. 27, 2017, just before the end of the recapture moratorium, allowing them to avoid the levy. Under transitional provisions in effect at the time, reconstruction complexes that filed for management and disposal plan approval by the end of 2017 were exempt from the recapture charge.

The H Banpo 124 plans to publish its resident recruitment announcement on Nov. 27 and open first-priority apartment subscriptions on Dec. 8. Of the complex's total 5,007 units, 1,801 are available for general pre-sale. The pre-sale price for the complex, which is subject to the price ceiling on new apartments, is expected to range from 90 million to 100 million won per 3.3 square meters. The pre-sale price for units with an exclusive use area of 84 square meters is projected to reach approximately 3 billion to 3.4 billion won.

"Buyers have generally been taking a wait-and-see approach recently," said an official at a real estate agency in Banpo-dong. "There is a lot of demand waiting for the nearby The H Banpo 124 pre-sale to wrap up, and the uncertainty from the recapture levy is adding to that."

In the reconstruction industry, there are concerns that if the recapture burden is added on top of already worsening project economics — driven by rising construction costs and financing expenses — it could disrupt project timelines. Critics also argue that imposing an additional charge on unrealized development gains is excessive, given that homeowners already bear various taxes at the acquisition, holding and transfer stages.

"There are already forecasts that additional reconstruction contributions could reach 1 billion won per member — and if the recapture levy becomes a reality on top of that, more complexes may grow skeptical about pushing ahead with reconstruction," said Kim Je-gyeong, director of Toomi Real Estate Consulting. "If the government wants to do more than just talk about revitalizing private redevelopment projects, it needs to demonstrate its policy commitment by abolishing the recapture system."