The whole area of Seoul as viewed from Namhansanseong Fortress on the 4th when measures to supply real estate were announced. yunhap news
–
Last year, when the government poured out regulations such as the right to apply for contract renewal, the upper limit for rent to cheonsei, the upper limit for sales rights, and the expansion of the land transaction permit system, the word “Danezuela (Venezuela + Korea)” began to spread as a buzzword in the real estate market. It was said that Korea is going to resemble Venezuela, which is controlled by the government from rent and lease renewal to sale and sale.
In the midst of this, on the 4th, the government came up with a second and fourth measure to provide new housing for 836,000 households by 2025. He accepted the market demand, “Do not distort the market with excessive demand suppression and price control, and increase the real estate supply first.” However, when looking at each topic, there are many reactions that are disappointing. This is because public institutions will achieve supply expansion through direct implementation of maintenance projects such as redevelopment and reconstruction. This is the reason why even supply measures are criticized as “government intervention, government-led?” There are also concerns that property rights infringement are likely due to the fact that the right to move in is not recognized when acquiring real estate in public development areas or that the development project can be carried out with only two-thirds of the residents’ consent.
Elements of infringement on private property in the 2nd and 4th measures
The core of the 2·4 measures is to establish a new maintenance project that is directly implemented by public institutions such as Korea Land and Housing Corporation (LH) and Seoul Housing and Urban Corporation (SH). Existing redevelopment and reconstruction are carried out by the land owners establishing a cooperative, but for public projects, the land is secured and directly implemented by public institutions with the consent of the residents. It means that the government will develop it directly without a union or promotion committee.
An official in the reconstruction industry said, “Cooperative members have a strong sense of rejection that they leave their assets to the government and lose their own decision to make a business,” he said. “Except for some low-business areas, they will not be interested.” It is pointed out that the government has come up with low-effective countermeasures because of the illusion that “the state must intervene to solve it.”
There are also elements of property infringement. First of all, it is controversial that it allows public development projects to be promoted even if only two-thirds of the land owners agree. It was lower than the required consent rate (three-quarters) of private redevelopment and reconstruction projects. In the case of private projects, the required consent rate may rise to 80-90% depending on the region. On the other hand, for public development projects, it is said that even if one-third of the residents oppose it, the government can enforce the project, raising concerns that cases of unfairly taking the land will continue.
It is also controversial that if real estate is purchased in the public development project area after the 4th of the announcement of the measures, the right to provide priority, that is, the right to move in, will not be given. Dae-Jung Kwon, a professor of real estate at Myongji University, pointed out, “It is a socialist idea to restrict transactions even though it is not known whether a specific area will be included in public development or is a candidate site, but the final business license will be issued.” He predicted, “If there is a case of depriving you of the right to live in accordance with this regulation, it is highly likely to lead to unconstitutional lawsuits.”
◆”Going away from the obsession with government universalism”
Because of these factors, there are voices saying that Venezuela is emerging again. In Venezuela, most housing development projects are directly ordered and executed by the housing department under the administration. Starting in 2010, 57 projects began to be directly involved in private housing development. Of course, in the case of Korea, public development projects need to be agreed upon by more than two-thirds of the residents, but concerns are raised that government intervention may be strengthened if projects are sluggish in the future.
It is pointed out that the regulations implemented last year are more similar to Venezuela. The ceiling on the sale price of private residential land, which was implemented in July last year, is similar to the measures Venezuela banned from reflecting the increase in consumer prices when selling houses in 2009. Venezuela made it possible to sell and sell only houses that were approved by the government through the’Real Estate Fraud Prevention Act’ in 2011. Since last year, Korea has also been expanding the areas to which the land transaction permit system is applied to Jamsil-dong, Samseong-dong, Daechi-dong, and Cheongdam-dong in Seoul. Venezuela froze all rents for nine years from 2003 and banned evictions from 2011 until tenants acquired a new home. Although the water level is lower than this, Korea also implemented a ceiling system for rent to cheonsei (no increase of more than 5%) and a right to apply for contract renewal (guaranteed to renew a contract for an additional two years).
However, as government intervention is strengthened, criticism is growing that the price of real estate increases and only various damage cases increase. For example, according to the Korea Real Estate Agency, last year, the nationwide home sales price rose 5.36% from the previous year, recording the highest increase rate in nine years.
Professor Kwon pointed out, “Unless the government abandons the obsession with the illusion that the state must intervene and lead everything to solve the problem, the market turmoil will continue.”
Reporter Seo Min-joon [email protected]
–
