Han River-View Rental Apartments and Property Rights Protection

People are saying, “This is going too far.” The issue concerns real estate, one of the hottest topics in South Korea. The reason people say it has gone “too far” is that the Seoul Metropolitan Government has recently been pressuring reconstruction complexes along the Han River—such as Jamsil Jugong Complex 5, Yeouido Gongjak Apartment, and Ichon Hangang Mansion—to “arrange the buildings so that rental apartments can also enjoy Han River views.” Criticism that this excessively infringes on citizens’ property rights is entirely natural. At the same time, there are reportedly moves to abandon or delay reconstruction projects themselves. If that happens, there are serious concerns that Seoul’s already severe housing supply-demand imbalance will worsen further, and that existing home prices will surge as an unavoidable side effect.

The reason for forcing developers to “arrange the buildings so that rental apartments can also enjoy Han River views” lies in the so-called social mix policy. This policy, meaning “social mixing” or “class mixing,” is, simply put, based on the idea that if wealthy and less wealthy people live mixed together in the same neighborhood or apartment complex, they will interact, broaden their understanding of one another, reduce class conflict, and achieve social integration. In other words, if people are physically and spatially mixed together, some sort of qualitative or “chemical” reaction is expected to follow. But does forcing people into the same space actually produce qualitative and emotional reactions? And if such reactions do occur, will they promote harmony and integration between classes, or will they instead worsen division?

Looking at the apartment complexes where this policy has been pursued so far, the results have been completely different from what policymakers expected. Developers have responded by, for example, creating separate buildings for rental units, dividing the rental and owner-occupied sections of the complex, and even separating entrances. In response, further regulations were added requiring rental and owner-occupied units to be mixed not only within the same complex but even within the same building. People then found yet other ways to separate them under these rules—for instance, by placing rental units mostly on the lower floors and installing separate elevators for rental residents and owner-occupiers. This latest layered regulation now at the center of controversy will likely be no different. Giving up on reconstruction altogether, or delaying it and waiting, is also becoming an option. According to psychologists’ research, people are more sensitive to pain than pleasure, and to loss than gain.

What is especially striking in this controversy is the Seoul Metropolitan Government’s response. When members of the relevant apartment associations voiced dissatisfaction over the “mandatory placement of rental apartments in Han River view locations,” the city responded that it could not understand the complaints because the requirement was “the price to be paid for the special benefit of easing floor area ratio regulations.” In other words, the city claims it granted a special favor and is merely asking for something in return, so what is there to complain about? But is that really a special favor? To begin with, floor area ratio regulations themselves are an infringement on citizens’ property rights. Of course, there have been justifications for such regulations: appropriately limiting building density and height to ensure public safety and convenience, protecting the environment by securing green space, and promoting balanced urban growth. Whatever the justification, however, easing such regulations merely returns to citizens part of the right that was previously taken away. Can bureaucrats really call that a “special favor”? Citizens are not receiving a privilege; they are simply getting back what was taken from them.

And if it is indeed a special favor, why does the government—the Seoul Metropolitan Government—grant such favors selectively, and only to a few apartment complexes? To say that easing floor area ratio regulations is a special favor is either to admit that the reasons for the current regulations are not very sound in the first place, or at least to admit that relaxing them to the extent currently proposed would not significantly undermine the intended effects of the regulation. If so, rather than granting selective favors to a few complexes and demanding payment in return, it would be right to move toward an overall relaxation of the regulations. Moreover, this kind of across-the-board deregulation, rather than selective favoritism, could also help block politicians and bureaucrats from abusing regulation for their own private interests. This controversy, perhaps unintentionally, raises the need for a fundamental reconsideration of floor area ratio regulations.

The forced “placement of rental apartments with Han River views,” justified in the name of reducing class conflict and promoting social integration, should be withdrawn. Not only is it unlikely to produce the intended effects, it also carries a high risk of aggravating the housing supply-demand imbalance. Jason Brennan has said, “A government that acts with the intention of producing a certain result does not thereby truly guarantee that the result will occur. More often, it prevents that result from occurring” (Liberalism: 105 Questions You Need to Know). This observation applies not only to the issue at the center of the current controversy, but to most government policies.

Hyukchul Kwon (Director, Free Market Institute; Economics)

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Original title: 한강뷰 임대아파트 이슈와 재산권 보호

Author: Hyeok-cheol Kwon

Date: 2025-06-13

Source: https://www.cfe.org/bbs/bbsDetail.php?cid=column&pn=1&idx=27801