SMG to Supply Small-Sized Houses for the Young
Areas nearby subway stations – the solution to a lack of houses for young adults
The SMG has come up with the 2030 Housing Project for Young People by mitigating regulations on the development of areas close to subway stations.
Areas close to subway stations are replete with libraries and day-care centers, but their current development density falls below the average of Seoul due to the regulations. Under the 2030 Housing Project for Young People, the SMG plans to supply rental houses to young people by allowing high-density development in areas close to subway stations. The SMG will also encourage private construction businesses to take part in the project by simplifying the deliberation and permit procedure, in addition to raising the floor area ratio in areas close to subway stations to a level close to semi-residential/commercial areas. Raising the floor area ratio means a higher possibility of building taller buildings on a given size of land than before.
The project will require private construction businesses to build them all as semi-public rental housing in return for enjoying the benefit of mitigated regulation and the change in the status of the designated land. The SMG plans to have 10~25% of the houses built as smaller units (45㎡ or smaller) and supply them to college students, those fresh out of school, and newlyweds at 60-80% of the prices in nearby areas. For other semi-public rental housing, those moving into them are required to live there for at least 8 years. The increase in the rental rate will be fixed at no more than 5% a year.
On March 23, the SMG announced a project for “the Supply of Rental Houses in Areas Close to Subway Stations for Young Adults,” which will be put into effect over the next three years. The project will supply a considerable number of small-sized rental houses to young adults. It is expected that the project will ease the pressure on many young people, who are forced to move out of the city due to high housing prices and jeonse (full deposit payment up-front for leasing a house) /wolse (monthly rent).
The SMG will mitigate the regulation and private construction businesses will supply rental houses in areas close to subway stations.
The candidate areas for the project are areas close to subway stations where two or more railroads/subway lines cross each other or within 250m (based on platform) from 30m-wide roads with a bus-only lane. It may be possible to change the status of the designation as a special-purpose area, depending on the conditions. Residence-only areas, Type I general housing areas, and downtown areas close to Hanyang Castle Walls are excluded from the project.
In the event of a change from a Type III general housing area to a commercial area, the area can enjoy the benefit of a 430% rise in the floor area ratio with the application of base floor area ratio of 680%.
The SMG expects that, when 30% of the land in the said areas is developed, 210,000 houses sized 30% or smaller will be able to be newly built, with 40,000 of them supplied as public rental housing.
The SMG is adopting a new system of guaranteeing the minimum floor area ratio (400% for semi-residential areas and 680% for commercial areas) if basic conditions are met to ensure private businesses’ profitability. The current system requires a lower overall floor ratio in proportion to the ratio between the land and residential space.
The project implementation procedure will be simplified further. The construction businesses will see the time required to obtain approvals and authorizations reduced noticeably, as they need only to go through the integrated deliberation committee handling urban, transportation, and architectural matters in one step.
The requirement for parking lots will also be alleviated in consideration of the areas being close to subway stations. Facilities for car sharing will be provided for residents in the areas. The SMG plans to let only young people with no vehicles move into the new public rental housing.
In addition, the SMG will provide financial support for both the private construction businesses and those moving into the houses in the area. For the businesses, property and acquisition taxes will be reduced. Loan interest will be covered by up to 2% based on the principal of up to 150 million won per house. A loan of 450 million won will be provided to each house to pay security deposit.
The SMG will enact the municipal ordinance in close cooperation with the City Council and start the project in earnest. It is expected that the houses will start to be supplied by the first half of 2017.
Pilot projects will be started in areas close to Chungjeongno Station and Bonghwasan Station in July this year. The SMG says that these Type III general residential areas fulfill conditions to be upgraded to semi-residential areas. 340 rental houses will be built in the area close to Chungjeongno Station after upgrading to a semi-residential area.
Commenting on the said project, Mayor Park Won-soon said, “We need to do something to encourage young people who are suffering in the midst of the worst youth unemployment rate ever. This project is designed to help them live in a stable environment. Many of them live like refugees in facilities like gosiwon (one-room studio used by many students for its low rent).”
▶ For inquiries, please call the Rental Housing Division (02-2133-7053).