They were told they’d get two apartments—could the price of the extra unit more than double?

[Financial News] The “1+1” allocation, which allows redevelopment association members to receive two new apartments, is emerging as a new variable in redevelopment projects. After a lawsuit over the cancellation of 1+1 allocations in Bukahyeon 2nd District ended in the association’s favor, changes to the price of additional homes and whether members are entitled to protection of legitimate expectations have become key issues in Noryangjin 4th District.
According to redevelopment industry sources on the 25th, the Noryangjin 4th District Redevelopment Association issued a notice on the 20th about a new round of applications, distinguishing between members who had applied for 1+1 allocations since 2022 and those applying for the first time now.
When it adopted its initial management and disposition plan in 2022, Noryangjin 4th District decided to apply the member price to additional homes as well. Recently, however, it has been pursuing a plan to set the price of additional homes at 60% of the estimated general-sale price.
For a unit with an exclusive area of 59 sq. m., the estimated general-sale price is 1.9 billion won, putting the price of an additional home at 1.14 billion won. That is more than double the tentative member price, which is in the low 500 million won range. Existing 1+1 applicants are protesting that it is unfair to change the pricing basis after the fact, saying they chose two homes in reliance on the original terms.
Citing legal advice, the association said that members who applied for just one home in 2022 and are choosing 1+1 for the first time now are not entitled to protection of legitimate expectations regarding the previous price. It explained that their legal status differs from that of existing applicants because they are applying anew after reviewing the revised pricing terms.
The association has also prepared responses for existing 1+1 applicants based on the outcome of the lawsuit. If the price change is ruled lawful, they will be allowed to give up the additional home, but changes to the size of their original one-home allocation will be restricted. Conversely, if the applicants’ claim is upheld, the association plans to minimize project delays by securing reserve units and contingency funds and adjusting the proportional rate.
The 1+1 allocation is a system that allows association members to receive two homes within the value of their pre-redevelopment assets or the exclusive floor area of their existing home. One of the two homes must have an exclusive area of 60 sq. m. or less. However, the allocation is not mandatory, so its terms may vary depending on project conditions and the management and disposition plan.
As rising construction and financing costs have increased the burden of project expenses, disputes over the original 1+1 terms are also emerging. Bukahyeon 2nd District canceled the supply of additional homes in 2024, citing deteriorating project feasibility and other factors. In April this year, Seodaemun District made it a condition that 1+1 applications be accepted again, but on the 19th it revoked that requirement on its own authority.
Interests may diverge even more at project sites where only some members have applied for 1+1 allocations. Raising the price of additional homes could increase the association’s revenue and create room to reduce other members’ contributions, while increasing the burden on existing applicants.
A redevelopment industry source said, “With construction and financing costs rising sharply, some project sites may find it difficult to maintain the 1+1 terms set in the past. Because the issue of protecting the legitimate expectations of members who applied in reliance on the original terms is also involved, finding a middle ground between improving project feasibility and protecting members’ rights will become increasingly important.”
[email protected] Choi A-young Reporter