As the threshold for safety inspections for reconstruction is lowered, expectations for the revitalization of reconstruction projects are growing. However, due to recent construction market stagnation and rising construction costs leading to deteriorating project viability, it is anticipated that there will not be immediate significant effects on-site.
According to the urban maintenance industry on the 23rd, a revised urban maintenance law aimed at reforming the safety inspection system, which adjusts the name and timing of the inspections, is set to go into effect starting on the 4th of next month. This is known as the "fast track" bill for reconstruction that allows reconstruction to proceed without a safety inspection.
Currently, in order to promote a reconstruction project, the safety inspection procedure, which assesses structural safety and residential environment, is mandatory, and without passing this inspection, it is impossible to designate a maintenance area. Once the revised bill is enacted, the term will change from safety inspection to reconstruction inspection, and the on-site investigation procedure will be abolished.
Specifically, previously, a reconstruction procedure could only begin after obtaining a D grade or lower in the safety inspection to confirm risk, but with the enactment of the revised bill, residents of apartments that have completed construction for a specified period can proceed with the reconstruction project without a safety inspection if they wish. For apartments over 30 years old, residents can form a promotion committee and establish maintenance plans and proceed with the establishment of the organization without a safety inspection. The safety inspection only needs to be passed before the project approval process.
Earlier, on the 1st, a revised urban maintenance law that simplified the maintenance project procedures was enacted. Previously, to establish a reconstruction organization, consent from more than 75% of all land owners was required, but this has been relaxed to a consent rate of 70%. The land area requirement has also been relaxed from 75% to over 70%.
Additionally, the requirement for more than half of land owners to agree, including for commercial properties, has been relaxed to require the agreement of over one-third of owners for commercial properties. Under the current law, the entire commercial property is considered as one entity. Accordingly, the Ministry of Land, Infrastructure and Transport and the maintenance industry expect that the organization establishment period will shorten.
The government expects that the reconstruction period will be shortened by up to three years due to regulatory easing. In particular, as it is anticipated that areas with a high proportion of aging apartments, such as Nowon District, Dobong District, and Yangcheon District, will benefit from such policies, expectations are rising.
An official from a certified real estate agency in Sangye-dong, Nowon District, said, "Complexes that are over 30 years old have had to spend too much time passing precise safety inspections so far," and noted that, "The precise safety inspection requires collecting significant diagnostic expenses from owners, which makes persuasion difficult and is time-consuming. If this issue is resolved, residents of aging complexes will actively participate."
However, on-site reactions indicate that, due to rising construction costs, conflicts over shared expenses have increased, and project viability has deteriorated, suggesting that the enactment of the revised bill will have little impact.
A representative from a reconstruction organization in Seoul said, "Of course, the safety inspection also required a lot of time, but recently, because of high shared expenses due to rising construction costs, progress on projects is not going well," and added, "While accelerating reconstruction is positive, if issues related to the burden of shared expenses and ensuring project feasibility are not resolved, there won't be significant effects."
A representative from a certified real estate agency in Banghak-dong, Dobong District, said, "This is good news for aging complexes, but if it's not an area like Gangnam that has financial leeway and high selling prices, reaching an agreement among owners regarding shared expenses might not progress quickly due to this issue."
Experts pointed out that to see practical effects, easing floor area ratio regulations and abolishing the system for collecting excess profits from reconstruction must be carried out in conjunction.
Ko Jun-seok, an associate professor at Yonsei University's Sangnam Business School, stated, "It is expected that the effects will become clear if the easing of floor area ratio restrictions, abolition of the system for collecting excess profits from reconstruction, and lifting of the sales price cap are all carried out together to alleviate the burden of shared expenses."