Banpo Hyundai Members Face KRW 220 Million Charge Each; Association "Ready to File Administrative Suit"

Seocho-gu Office Issues Advance Notice of KRW 17.9 Billion Recapture Charge for Banpo Hyundai
Association Protests Calculation; Announces Objection and Administrative Lawsuit
Concerns Over Burden on Provincial Reconstruction Projects; Delays Possibl

Seocho-gu Office notified the Banpo Hyundai (Banpo Centerville Asterium) reconstruction association on November 9 that its preliminary reconstruction excess profit recovery charge would be KRW 17.9 billion, signaling that each association member could be required to pay around KRW 200 million. The association pushed back, saying it would file an administrative lawsuit if a final notice is issued after it submits an objection. As the burden of the reconstruction charge becomes a reality, starting with Banpo Hyundai, concerns are growing that housing supply through urban redevelopment projects could be disrupted.

On November 9, Seocho-gu Office notified Banpo Hyundai of a preliminary reconstruction excess profit recovery charge of KRW 17.9 billion. Earlier that day, the office visited the Ministry of Land, Infrastructure and Transport to request an interpretation of the relevant laws on whether there was grounds to consider 2029 as the expiration date for the right to collect the charge. After the ministry provided no separate response, the office notified the association of the preliminary amount in the afternoon.

If the preliminary notice is later finalized, Banpo Hyundai's 80 association members will each have to pay an average of KRW 224 million. The estimated charge previously notified to the association by the district office in 2016, when the project management and disposition plan was approved, was KRW 100 million per member, KRW 124 million more than the estimate at the time. An official from Seocho-gu Office explained, "The amount was calculated at a higher level than the preliminary estimate because the land costs for the rental housing to be provided as a contribution in kind were not submitted. If the association submits those costs additionally, the amount could fall to the low KRW 100 million range."

The association plans to file an objection while also preparing to bring an administrative lawsuit later to challenge the method used to calculate the charge, including the increase in normal housing prices. "The increase in normal housing prices was calculated absurdly," said Lee Sunbok, head of the Banpo Hyundai association. "If the charge is imposed like this, we have no choice but to go to court." He added, "We will call for the abolition of the reconstruction excess profit recovery system and amendments to the law, and consider an administrative lawsuit if the charge is formally imposed."

As the burden of the reconstruction charge is expected to spread, starting with Banpo Hyundai, concerns are growing in the Gangnam-area reconstruction market. The system, introduced in 2006 and previously applied only to some small villa and townhouse developments, is now being applied to high-priced apartment complexes in the Gangnam area, raising concerns that urban redevelopment projects could be dampened.

Some expect the impact to be particularly severe in provincial areas, where the real estate market is relatively sluggish compared with Seoul and unsold homes are piling up. Provincial reconstruction complexes subject to the charge reportedly have a higher proportion of elderly, long-time resident members than those in Seoul. They are also struggling to afford additional reconstruction charges after shouldering large contributions due to sharply increased construction costs.

"For units of the same size, we have already paid about KRW 50 million to KRW 60 million per household in contributions, and have also had to cover around KRW 30 million in interest alone on relocation loans, leaving us short on cash," said Park Seonyong, head of the Beomeo I-Park association in Daegu. "Currently, 70% of our members are long-time residents. As more elderly members have retired during the reconstruction process, it is difficult to pay the reconstruction charge unless they sell their homes."

Kim Byeonghwa, head of the Daemyeongyeok Goan association in Daegu, also said, "In Seoul, home prices are high, so owners can expect a profit even if they sell later. But in provincial areas, apartment prices themselves are low, making it difficult to afford even charges of tens of millions of won." He added, "The 250 association members have an average age of 70, and most are retired, so a charge of KRW 30 million could place a heavy burden on their livelihoods."

The Ministry of Land, Infrastructure and Transport said the implementation of the reconstruction excess profit recovery system could delay some redevelopment projects, but that various administrative procedures could help make up for delays. "We believe that if association members face a financial burden due to the reconstruction charge, decision-making could be delayed," a ministry official said. "However, we are pursuing various measures, including the September 7 measures, to speed up urban redevelopment projects."

This content was produced with the assistance of AI translation services.