Loan restrictions are eased not only for first-time homebuyers, but also for homeless, newlyweds, and young people.
The floor area ratio of the first new city was raised to 300%, and tenants also reviewed the right to move in and additional points, etc.
photo = Yonhap News
The Presidential Takeover Committee decided to ease loan regulations, such as LTV (Loan to Mortgage Ratio) and DSR (Total Debt Repayment Ratio), for homeless people, newlyweds, and young people who are actual buyers of housing. A plan to increase the floor area ratio of apartments (residential areas) in the first phase of reconstruction in Bundang and Ilsan to more than 300% is being considered, on average, by more than 100% points.
It was confirmed on the 27th that the Real Estate Task Force (TF) of the Acquisition Committee held a meeting recently and discussed intensively on measures to regulate real estate loans and ease reconstruction regulations. It is reported that the mid- to long-term real estate deregulation policies, which had been postponed since the inauguration of the new government, were intensively discussed due to concerns about a rise in house prices.
In the case of loan regulation, plans to ease restrictions on end users such as homeless people, young people, newlyweds, and unmarried couples were discussed. For these end users, a plan to raise the LTV up to 80% is said to be strong. Considering future income, etc., the DSR regulation is also being discussed. This means that if you have a stable income, you can get a loan from a bank or other financial institution up to 80% of the house price. However, actual detailed deregulation may be differentiated according to market conditions, regions, and income levels.
Currently, in speculative areas such as Seoul and overheated speculation districts, LTV is regulated as △ 40% up to KRW 900 million △ 20% above KRW 900 million and less than KRW 1.5 billion △ 0% above KRW 1.5 billion. Most apartments in Seoul cost 1.4 billion won or more based on 84 square meters, so there were many complaints that it was difficult for end-users without a home to purchase an apartment.
Initially, due to concerns over a surge in house prices and household debt, the transition committee had decided to limit the target of LTV relief to first-time homebuyers. The DSR has taken a non-mitigative position. However, recently, as criticisms grew that “the promises have been retreating one by one since he was elected with the help of deregulation on real estate,” voices calling for the fulfillment of the presidential promises have begun to gain strength.
The stance on reconstruction regulations is also changing forward. The Real Estate TF is strongly examining a plan to raise the floor area ratio to more than 300% for apartments (residential areas) reconstructed in the first phase of new towns such as Bundang, Ilsan, Middle East, Pyeongchon, and Sanbon. In the case of an apartment near a station, the plan is to raise it up to 500% by raising the bell. Currently, these first-phase new towns have a lot of high-rise apartments, so the average floor area ratio is only 169-226%. This means that the floor area ratio will increase by more than 100% on average.
Exemption from safety examinations for apartments over 30 years old will also be promoted as promised. For existing tenants, a plan to give benefits such as the right to move in or additional points for subscription is being considered. President-elect Yoon Seok-yeol promised to speed up this reconstruction project by enacting the ‘Special Act on Promotion of the 1st New City Reorganization Project’. An official of the transition committee said, “Even the lawmakers of the Democratic Party, who have to hold elections, do not oppose the 1st new city reconstruction special law.”
photo = Yonhap News
It is said that the reason why the transition committee, which had been cautious about easing the reconstruction and reconstruction regulations, turned around was because it was judged that the atmosphere in the recent local elections was not serious. In fact, when the policy of the transition committee to promote the reconstruction of the first new city as a mid- to long-term national task was recently reported in the media, complaints were pouring in that it was “actually overturning the election promise.” Ahn Cheol-soo, chairman of the Presidential Transition Committee (pictured), did not ask a question on the way to work that day, but he emphasized that “the official position is to proceed without any setbacks”, referring to the controversy over the overturn of the 1st new city reconstruction promise.
He said, “If you look at the contents of the bill proposed by the opposition parties, the most important thing is to raise the floor area ratio, and then to simplify the safety diagnosis. In some cases, we are even thinking about solving the transportation problem.” In a press release the day before, the transition committee also said, “General maintenance projects take a long time, but in the case of the first new town, it is possible to dramatically shorten the period due to special laws, etc.”
President-elect Yoon’s side and the people’s power expect that the 1st new town reconstruction issue will have a significant impact on the local elections in June. Ahn is being talked about as a strong candidate in the Gyeonggi Bundangap by-election, which became vacant after Rep. Kim Eun-hye’s candidacy for Gyeonggi governor.
However, it is reported that many experts in the transition committee are also cautious that the policy of deregulation for reconstruction can raise house prices again. There is also a warning that if the reconstruction of the first new city apartment building is carried out in a hurry, migrants will flock to it, which could encourage an increase in rental prices in the metropolitan area. Deputy Prime Minister and Minister of Strategy and Finance Choo Kyung-ho, in a written inquiry at the personnel hearing on the 27th, said, “It is difficult to secure business feasibility due to the high floor area ratio of existing houses. We need a way.”
Reporter Dongwook Jwa leftking@hankyung.com
