On January 16, 2018, the government announced amendments to the Special Act on Private Rental Housing (the “Private Rental Housing Act”) (the “Amendments”). The Amendments are designed to make private rental housings more public-friendly by introducing certain stability measures (such as imposing limits on rents during an initial lease term) and improving the system by deregulating certain requirements. The Amendments will take effect as of July 17, 2018.

Key Aspects:

1.  Introduction of “publicly subsidized private rental housing”

• The Amendments will introduce a concept of “publicly subsidized private rental housing,” which refers to a private rental housing constructed or purchased with certain forms of public subsidies (such as contribution of funds from the Housing and Urban Development Fund).
• The Amendments will also provide special benefits, such as granting a no-bid contract for public housing lots and imposing more lenient requirements on building sizes (e.g., applying the maximum building coverage ratio and floor area ratio).

2.  Relaxed qualifications and procedures for Promotion Districts

In order to facilitate development of small-sized promotion district business in areas with high demands for rental housings (e.g., subway station areas), the Amendments will allow the minimum area requirement for designation as a promotion district to be reduced from 5,000m² to 2,000m², and allow a joint filing for both designation as a promotion area and as a district unit plan, once the filing has been reviewed by the Review Committee for the Publicly Subsidized Private Rental Housings. The reasoning for the latter is to streamline the process so that such designation or plan can be approved without having to go through the review processes of urban planning committees of the relevant city and/or province.

Significance:

Since details¹ will be specified by decrees and rules set by the Minister of the Ministry of Land, Infrastructure and Transport, companies are recommended to monitor and review subsequent decrees and rules to the Amendments.