Can you avoid 'rental' by paying only 2 billion? Seoul accepts cash contribution for Daechi reconstruction

[Financial News]  It is reported that Seoul has accepted the claims of a reconstruction apartment complex in Daechi-dong, Gangnam-gu, Seoul, which is scheduled to move in this August, by setting a condition of '2 billion won cash donation' after the complex virtually rejected the social mix principle. 

Money Today reported on the 26th that Seoul held the 8th Urban Planning Committee meeting on the 21st and approved the original plan for the 'Daechi-dong Gu Village 3 District Reconstruction Maintenance Project Plan Change' in the area of 964 Daechi-dong, Gangnam-gu.

In the review, Seoul decided to impose a penalty of 2 billion won in the form of a cash donation on the association, instead of conditionally accepting a separate draw for the complex. The amount is calculated by applying 3.5 times the difference in appraised housing value. Considering the land appraisal value is 38.8 million won per 1㎡, a donation of 52.41㎡ land size has been made.

This complex is being constructed by Hyundai Construction as 'The H Daechi Edelweiss' with a floor area ratio of 249.95% or less, a maximum of 16 floors, and a total of 282 households (37 rental units). Previously, the reconstruction association conducted separate draws for general sales and rental housing, raising issues of effectively separating rental and general sales.

In particular, the acceptance of cash donations is a decision that directly contradicts Seoul's principle of creating a residential environment without distinction between rental and general sales, which has been continuously emphasized as a social mix, raising prospects for controversy over the policy's effectiveness in the future. 

A Seoul city official explained, "It is a kind of penalty for the association."

However, it is known that the 'penalty' felt by residents will not be significant. This is because Seoul does not recover the floor area ratio incentive. Although the allowable floor area ratio slightly decreased from 184.33% to 183.85%, the maintenance plan floor area ratio (202.63%) and the planned legal maximum floor area ratio (249.95%) remain the same as before.

It is also known that there is an atmosphere of welcoming the avoidance of social mix by paying fines among residents. Currently, not only this complex but also major reconstruction and redevelopment complexes in Seoul have been avoiding social mix.

In October 2021, Seoul made it mandatory to apply rental housing social mix to all reconstruction and redevelopment complexes in the city, and at that time, Oh Se-hoon, the mayor of Seoul, emphasized 'complete mixing' between rental and sales households.

However, it is reported that there are comments saying, "Isn't it possible to avoid social mix just by paying money?" regarding Seoul's recent decision.

y27k@fnnews.com Seo Yoon-kyung Reporter