Have you ever gone out to eat at one of your old favorite restaurants only to find that it had been replaced by a large franchise café within the span of only a few months? This is what happens when a commercial district increases in popularity, which in turn drives rent up and forces small business owners and local residents to move out due to the increased cost of doing business. This phenomenon is called “gentrification.” To address the rapid gentrification of the city, Seoul Metropolitan Government (SMG) has devised a plan to return some of the profits of regional development to the local residents who contributed to the development of their communities. The plan is called the “Comprehensive Response Measures to Gentrification.”
The first metropolitan government in Korea to take steps to protect local residents from gentrification, the SMG will first focus on six areas where gentrification has become a particularly serious problem (Daehak-ro, Insa-dong, Sinchon-Hongdae-Hapjeong, Bukchon-Seochon, Seongmisan Village, and Haebangchon-Sewoon Shopping Mall-Seongsu-dong) and implement policies and provide resources. After evaluating the success of the measures in these areas, the city government plans to expand the implementation of the plan to all areas of the city.
① Agreement for Cooperation among Landlords, Tenants, and Local Government
The SMG will push for the signing of the “Agreement for Cooperation among Landlords, Tenants, and Local Government” in the six areas. According to the agreement, landlords will promise to maintain rents at their current level and ensure the security of the tenants’ cash deposits; the tenants will promise to refrain from committing acts that might disturb customers; and the city and district government will promise to provide administrative support.
② Lease of Key Facilities to Small Business Owners
The SMG will purchase or rent real estate to build key facilities that represent the characteristics of the area and lease them to small business owners, artists, and others at a low cost.
③ Implementation of “Safe Long-term Business Policy”
After receiving applications early next year, the SMG will implement the “Safe Long-term Business Policy,” the first of its kind in Korea. Through this policy, the government will provide the owners of deteriorated buildings with funds of up to KRW 30 million for renovations and repairs. In turn, the building owners will promise not to increase rent for a certain period of time and guarantee the lease period of the tenants.
④ Support Purchase of Business Sites for Small Business Owners
By the end of this year, the SMG plans to implement the “Capitalization Strategy,” through which prospective small business owners are eligible to receive long-term loans (maximum of 15 years) of up to KRW 800 million, or 75 percent of the price of the site they wish to purchase, at an interest rate one percentage point below the commercial rate.
⑤ Operation of Legal Support Team
The city government will also operate a legal support team consisting of 60 local lawyers and CPAs. This team will be available to provide legal or tax consultations to business owners free of charge in order to protect them from incurring losses due to any lack of knowledge of the law or tax system.
⑥ Implementation of “Commercial Tenant Protection Ordinance”
The SMG will implement the “Commercial Tenant Protection Ordinance” to establish an institutional foundation for the protection of commercial tenants.
⑦ Start Open Discussion on Gentrification
Prior to the implementation of these measures, the SMG will hold frequent discussions and meetings with local private and public organizations so as to provide up-to-date information to the public and establish a social consensus on the issue on gentrification.