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Title[Newsway] [Shin Hee-sung’s real estate theory] ‘Change of use’, the alchemy of upgrading real estate value2015-03-18 09:42

You can make a lot of money if you remodel a well-built wooden house located at the entrance of a natural recreation forest and turn it into a pension, or if you can remodel a single-family house by the lake in the scenic greenbelt of the metropolitan area into a restaurant and run it. 

Changing the use of an existing building is called changing the use of a building. The term change of use is a legal term. It is widely used in construction and land-related construction laws, such as the Building Act, Cadastral Act, and National Land Planning and Utilization Act. 

In general, change of use is most common and well-known in the case of buildings, but it is not limited to buildings. There is also a change in use of land. Let’s look at examples of change of use in various cases under the current law.

Changes in land use include changes in use areas and land designations. Let’s start with the change in use area. Land in Korea is largely divided into four use areas.

There are urban areas, management areas, agricultural and forestry areas, and natural environment conservation areas. Urban areas are further divided into residential, commercial, industrial, and green areas, and each use area is further subdivided into type 1 residential, type 2 residential areas, central general commercial areas, semi-industrial general industrial areas, and natural production conservation green areas.

Depending on the use area, the type and scope of buildings that can be built, as well as the building-to-land ratio and floor area ratio, vary. In other words, the conditions for development and use are different. If a change is made between use areas, such as changing a semi-industrial area in an urban area to a commercial area, it is called a change in use area. However, changing the land use zone is the exclusive authority of the state or local governments. It does not mean that the landowner wants it. 

A change in land designation can also be said to be a change in land use. Land across the country is divided into parcels, and each parcel is given a land number along with a lot number. Land designation is determined and assigned by the government based on the form used at the time of designation, expected main use, type of land, and surrounding circumstances. 

According to the Cadastral Act, there are currently 28 landowners in Korea. Those that we are familiar with include land, mixed land, rice fields, fields, orchards, pasture lands, roads, rivers and ditches. Warehouse sites, factory sites, gas station sites, parking lot sites, etc. are also examples. 

Land designation is, so to speak, the use of land that was planned from the beginning. Therefore, if the use of the land changes later, the land designation also changes. If a farm house is built on part of a field that is farmland, the field where the house will be built turns into land. If a gas station is built after obtaining permission to change the quality of forest land along a rural road, the forest land in that area will be reclassified as a gas station site. 

When the main use of the land changes, the land use changes as a result, resulting in a land use change, so a land use change is the result of a use change. Under the current law, there is no example of changing the land name first without changing the use.

Shin Hee-seong, CEO of Remax Korea 


Original link: http://www.newsway.co.kr/view.php?tp=1&ud=2015031715123541721

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