Homes to be built instead of leaving commercial units empty... Threshold eased for mixed-use complexes of up to 500 households

[Financial News] The government is moving to accelerate housing supply in the Seoul metropolitan area as a follow-up to its August 13 supply measures. The Ministry of Land, Infrastructure and Transport (MOLIT) plans to ease household-count thresholds and total floor-area requirements for mixed-use residential and commercial buildings in commercial and quasi-residential zones outside existing residential areas. It also plans to streamline some procedures, including project plan approval.
The aim is to speed up supply by reducing administrative procedures and stabilize the housing market. Industry officials and experts welcomed the direction but predicted that it would be difficult to have a major immediate impact on housing supply.
According to MOLIT on the 29th, the ministry has been seeking public comment since the 16th on a partial amendment to the Enforcement Decree of the Housing Act. The amendment eases the criteria for mixed-use residential and commercial buildings.
The household-count threshold for mixed-use buildings in commercial and quasi-residential zones will be raised from fewer than 300 households to fewer than 500. This change will be subject to a sunset provision and apply temporarily through December 31, 2030. The total floor-area threshold will also be eased from below 90% to below 100%.
MOLIT said it prepared the amendment to expand housing supply in urban areas. A MOLIT official explained, "The measure is intended to make use of the floor-area ratio. In some cases, the floor-area ratio cannot be fully utilized because of the household count, so we are allowing the proportions of commercial space and housing to be adjusted according to demand by location."
MOLIT has set no fixed minimums for the proportions of commercial space and housing, taking into account rising commercial vacancy rates nationwide. This will allow areas with high housing demand to increase the housing proportion, while locations near commercial complexes can add more commercial space.
The amendment is intended to accelerate stalled housing supply. Previously, projects with 300 or more households and a total floor-area proportion of 90% or more had to undergo multiple procedures, including project plan approval. For developers, the lengthy process made it difficult to guarantee immediate profitability.
MOLIT plans to streamline procedures through the amendment and accelerate housing supply in the Seoul metropolitan area. Mixed-use buildings are often developed in well-connected locations, such as areas around subway stations, making them suitable for meeting housing demand, the ministry determined.
Experts were generally positive about the proposal. Chang-Moo Lee, a professor in the Department of Urban Engineering at Hanyang University, said, "In the past, land uses were separated, but mixed-use development has recently become a trend. With online commerce thriving, increasing the housing proportion is a desirable approach that can address short-term housing supply shortages."
Hyunsoo Kim, a professor in the Department of Urban Planning and Real Estate at Dankook University, also said, "Because the oversupply of commercial units is a problem, this amendment is expected to speed up housing supply. It is expected to have a particularly positive impact on activating housing supply in areas around subway stations."
An official in the construction industry said, "Since the housing proportion can effectively be raised almost to the limit, the measure seems likely to improve project feasibility. Some projects that had remained under review because their feasibility was unclear may now consider moving forward."
However, some critics said the amendment would remain merely a supplementary measure and have little impact on overall housing supply. Another industry official stated, "When lending and financing conditions are tight as they are now and various regulations continue to emerge, it is difficult to increase supply unless projects have strong sales prospects. The measure could certainly have a positive impact on some projects, but given its share of overall housing supply, it should be viewed as one supplementary measure rather than something that will significantly change the market."
There are also concerns that streamlining procedures could weaken public oversight, including quality reviews. Shortening the process could result in the removal of verification stages that were previously included in the existing procedures.
[email protected] Jung Kyung-soo Reporter