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Newsletter | December 2014, Issue 4
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REAL ESTATE
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Amendment to Act on Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents
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In order to boost the housing market, an amendment to the enforcement decree of the Act on Maintenance and Improvement of Urban Areas and Dwelling Conditions for Residents (the “Amendment”) which will ease the regulations related to reconstruction will become effective on March 25, 2015 following its promulgation on September 24, 2014.
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According to the Amendment, the requirement to supply a certain percentage of small-sized housing units (each with an exclusive area of 60㎡ or less) in accordance with the ordinance of the relevant province or city (e.g., in the case of Seoul and Gyeonggi-do, small-sized housing units should constitute 20% or more of the total number of the housing units to be built in a housing reconstruction project) (the “Minimum Supply Requirement”) will no longer apply to housing reconstruction projects. However, certain requirements such as the minimum percentage of certain small-sized housing units (i.e., housing units, each with an exclusive area of 85㎡ or less, kuk-min-ju-taek in Korean, should constitute 60% more of the total number of housing units constructed) that should be constructed in a housing reconstruction project will continue to apply.
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As small-sized housing units (each with an exclusive area of 60㎡ or less) are voluntarily supplied to the housing reconstruction market due to a changed demand for housing, the Amendment appears to reflect the current state of the market that no longer requires the application of the Minimum Supply Requirement. As the Amendment allows the supply of housing units of various sizes at the election of the members of the association, it is expected to enhance market autonomy.
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