The Constitutional Court's ruling on the impeachment of former President Yoon Suk-yeol has led to an early presidential election, resulting in a complete halt to the Yoon administration's real estate policies. Policies promoted by the Yoon administration, such as easing reconstruction regulations, may be nullified depending on the next government's direction. The real estate market is likely to maintain a wait-and-see attitude, paying attention to the promises of major presidential candidates for a while.
According to the Ministry of Land, Infrastructure and Transport and the National Assembly's Land, Infrastructure, and Transport Committee on the 6th, a bill named the 'Special Act on the Promotion of Reconstruction and Redevelopment Projects' (Reconstruction Special Act), which shortens the approval process for redevelopment and reconstruction and raises the legal ceiling for floor area ratio to 1.3 times, is currently pending in the National Assembly.
The government's plan was to reduce the community consent rate needed for establishing reconstruction cooperatives from 75% to 70%, thereby shortening the reconstruction period by up to three years; however, the amendment to the Urban Renewal Act needed for this has also failed to pass the National Assembly.
In order to increase the pace of reconstruction and redevelopment, both ruling and opposition parties have broadly agreed, although there has been a disagreement only on whether to revise the general law to expand the target business sites or to establish a new special law as proposed by the government.
However, since the state of emergency on December 3 last year, legislative review in the National Assembly has come to a halt, and it remains uncertain whether the passage of real estate policy-related bills, which have a significant impact in the presidential election phase, will be achieved.
The proposed amendment to the Private Rental Housing Act for the introduction of corporate long-term private rental housing and the establishment of an integrated system for managing real estate project financing (PF) may also take time for follow-up discussions.
The opposition party, the Democratic Party of Korea, has clearly expressed its opposition to the abolition of the excess profit recovery system, the abolition of the two rental laws (renewal claim right and monthly rent ceiling), and the abolition of the roadmap for the realization of registered prices, making it uncertain.
The excess profit recovery system is a scheme where if a cooperative member's profit from reconstruction exceeds 80 million won per person, up to 50% of the excess amount is recaptured as an obligation, which was introduced by the People Power Party as the first bill of the 22nd National Assembly.
As the passage of bills has become difficult in the 'divided National Assembly', the Yoon administration ultimately could not realize the main real estate policies it presented as national tasks.
In the National Assembly, it is anticipated that legislative discussions will begin according to the real estate policy direction after the new government is formed.
There is a high possibility that the ongoing projects in the third new towns in the metropolitan area and the supply of new housing sites, as well as the reconstruction of first-generation new towns, will proceed as planned. This is because there is a consensus that there is a shortage of housing supply in the metropolitan area.
If the housing market stabilizes downward, there are also predictions that even if the regime changes, policies that strongly block demand like in the past will not be implemented.