south Korean Redevelopment Associations Demand abolition of Excess Profits recovery Act

Seoul, South Korea – January 22, 2026 – The National Federation of Redevelopment and Urban Regeneration Associations (전국재건축정비사업조합연대, or Jeonjaeyeon) has issued a strong call for the immediate repeal of the Housing Redevelopment Profit Recovery Act (재초환법, or JaechoHwanbeop).The demand, made on January 22nd, reflects growing discontent among redevelopment associations regarding the impact of the law on urban renewal projects across the country.

Understanding the Excess Profits Recovery Act

The Housing Redevelopment Profit Recovery Act, originally enacted in 2003 and significantly revised in 2020, aims to recapture a portion of the profits generated by developers and landowners during redevelopment projects. The core principle behind the act is to redistribute wealth created through urban renewal to benefit the public, addressing concerns about rising property values and housing affordability. The law applies when the internal rate of return (IRR) on a redevelopment project exceeds a predetermined threshold, typically around 20-25%.

How the Act Works

When a redevelopment project surpasses the profit threshold, a portion of the gains is levied. These funds are then allocated to public housing initiatives, infrastructure improvements, and other social welfare programs. The specific recovery rate varies depending on the level of profit generated. The act has been a subject of ongoing debate, with proponents arguing it’s essential for social equity and opponents claiming it stifles investment and hinders redevelopment efforts.

the Associations’ Concerns

Jeonjaeyeon argues that the JaechoHwanbeop is a major impediment to the accomplished completion of redevelopment projects. They claim the act increases financial risk for developers,discourages investment,and ultimately delays much-needed urban renewal. Specifically, the associations cite the following concerns:

• Increased Project Costs: The potential for profit recovery adds a notable layer of uncertainty and cost to redevelopment projects, making them less attractive to investors.
• Delayed Approvals: The complex calculations required to determine profit recovery amounts can lead to delays in project approvals.
• Reduced housing Supply: Developers, facing increased financial burdens, may be less willing to undertake redevelopment projects, ultimately reducing the supply of new housing.
• Market Instability: the act contributes to volatility in the real estate market,making it difficult to accurately assess project feasibility.

“The JaechoHwanbeop is fundamentally flawed and is actively hindering our ability to revitalize aging urban areas and provide much-needed housing,” stated a representative from Jeonjaeyeon in a press release. “We urge the government and the National Assembly to recognize the detrimental effects of this law and repeal it promptly.”

Government Response and Future Outlook

As of January 22, 2026, the South Korean government has not issued an official response to Jeonjaeyeon’s demands. However, the issue is expected to be a key topic of discussion in upcoming parliamentary sessions. Recent reports suggest that some lawmakers are considering amendments to the act to address concerns raised by the growth industry, but a full repeal appears unlikely in the short term.

Potential Amendments

Possible amendments under consideration include:

• Adjusting the Profit Threshold: Raising the IRR threshold required to trigger profit recovery.
• Simplifying Calculation methods: Streamlining the process for calculating recoverable profits.
• Providing Tax Incentives: Offering tax breaks to developers to offset the costs of profit recovery.

Key Takeaways

• The National Federation of Redevelopment and Urban regeneration Associations is calling for the abolition of the Housing Redevelopment Profit Recovery Act.
• the act aims to redistribute profits from redevelopment projects to public benefit programs.
• redevelopment associations argue the act discourages investment and hinders urban renewal.
• the government is considering potential amendments to the act, but a full repeal is not expected soon.