South Korea Unveils Plan to Normalize Troubled Housing Cooperatives

The South Korean government has unveiled a comprehensive plan to address the persistent problems plaguing regional housing cooperatives (Jigu Jutaek), a system designed to help middle- and low-income individuals secure affordable housing. For years, these projects have been marred by issues such as a lack of expertise among cooperative organizers, opaque management practices, and prolonged delays due to difficulties in securing land rights. The newly announced "Measures to Prevent Regional Housing Cooperative Damage and Normalize Projects" aim to streamline operations and protect the rights of cooperative members.

A significant adjustment involves lowering the threshold for land ownership required to gain project approval from 95% to 80%. This change is intended to mitigate project delays, which have often been exploited by project management companies and construction firms engaging in "land grabbing" tactics to extract unfair profits. To further combat such practices, a new provision allows for the compulsory purchase of land owned by special-related parties, such as project management companies or joint developers, regardless of how long they have held it.

“

This measure focuses on resolving the chronic difficulties in regional housing cooperative projects by reflecting on-site voices as much as possible, thereby increasing project speed and protecting the rights and interests of cooperative members.

To bolster transparency and professionalism, the government is introducing a "dealer registration system" for project management companies, aiming to prevent unqualified entities from operating. Moreover, construction companies seeking to increase project costs will be required to undergo verification by specialized institutions like the Korea Real Estate Board. The submission of related documents will also become mandatory when concluding construction contracts or requesting cost increases. The reforms also extend to improving the transparency of cooperative operations through more detailed information disclosure requirements and expanded accounting audits.

Recognizing the need for efficient member participation, the plan includes the introduction of online general meetings and electronic voting. The scope of proxy representation will be strictly limited to spouses and direct lineal ascendants or descendants. For cooperatives that have been stalled for extended periods or are deemed to be in poor condition, the government will offer support such as legal advice and exit strategy consulting to encourage their timely dissolution. The Ministry of Land, Infrastructure, and Transport plans to initiate legislative action for necessary legal revisions in the first half of this year, alongside updating subordinate regulations and standard guidelines.

“

With the strengthening of initial entry standards announced last year and these measures, it is expected that damage to regional housing cooperatives will be significantly reduced.