Episode 6: Beyond the Dilemma of Dugeng|Share new ideas and create urban regeneration

Speakers in this episode: Manager Liu Diyong of the Securities OTC Trading Center, Director Wu Hongqing of Yushan Bank, Chief Legal Officer Chen Jiancheng of Shin Kong Bank, and Chief Operating Officer Xu Qichang of Zicheng United Accounting Firm (ordered according to 
the order of appearance 
in the video )

Urban regeneration is to provide Taipei people with a better quality environment. I hope my family and I can live a happy life in Taipei because of this.

     The value of land comes from the value created by the development of land-related rights. The rarity and sustainability of land come from the functional development endowed by urban planning. If the land holdings continue to be fragmented, subsequent changes will occur, and it will be even more unsustainable.

      Securitization allows small investors to hold one unit and make it easily tradable. Real estate securitization allows small investors to participate in the value created by development.

      Land holdings and securities holdings actually hold the same certificate for small investors.


Urban sustainability: slow speed and many problems in urban renewal


      According to statistics from the 2018 “Housing Exhibition” magazine, if this pace continues, it will take about 1,400 years to completely renew all the old houses in Taipei that are more than 30 years old. This is obviously an unacceptable situation for us. Speed, but it is obviously unrealistic to ask the majority of the public to be willing to spend more money to build houses.


Urban sustainability: One square meter for one square meter, volume bonus is controversial

 Tsai Han-lin, chairman of the Taipei City Urban Renewal Society, introduced to the audience the current incentive capacity, which seems to be free, but in fact the entire population pays for it. The design of the bonus volume is like opening Pandora’s box, leaving endless sequelae.


      According to the current capital bonus method, the expected value of volume bonus is about 30% to 50% of the capacity. With the same community, Da’an District can make money, but if Tamsui District wants to get the same reward, Tamsui District may have to give it a 290% volume reward. This is of course unreasonable, because the areas that need the most renewal, the most. Old areas and areas with low housing prices are finding it difficult to move forward. We were very smart to create a reward system for urban renewal, but it caused everyone to have a wait-and-see attitude, which in turn delayed or even hindered the advancement of urban renewal.

We enforce the demolition of illegal or old houses, but there are still many sequelae, because many residents with small land holdings, houses and land, illegal occupation users, etc., are disadvantaged groups who cannot afford the operating costs of new housing areas and subsequent maintenance costs. . Therefore, it is difficult to talk about housing justice without “one ping for one ping”, but with “one ping for one ping” there is no social fairness. This is a dilemma.

How can I get back the accumulated credit? A new mechanism is needed

What we should discuss at this time is: “The Urban Regeneration Bill proposes to give the people a new choice.” This issue originated from the “land-for-housing” system.

     “Land exchange” is not free. In fact, households pay for building houses by “reducing their land holdings”. Taking the common construction ratio of 65/35 in Taipei City, or the common 50/50 split in New Taipei City, the owner actually exchanges half of the land for the new house. This is how the so-called “real estate exchange business tax” comes about of. However, the land-for-housing model also has its limits. For example, each household in a mid- to high-rise housing complex has a small land holding. When the land holdings are small and the residual value of the land is insufficient, land-for-housing cannot be established. In fact, in the future, these houses will have serious problems such as extremely fragmented land property rights and too small holdings, resulting in insufficient land residual value and difficulty in secondary renewal and revitalization.

Given the opportunity to choose, the dilemma of illegal construction can be solved

Therefore, the breakthrough opportunity is that we must find a new business possibility.

     What if we didn’t even want all the houses today? We exchange 100% of the land for a new house, so can we get back 2.5 times the value? Come back?” Maybe even sell it or convert it. It does not affect the living area at all, and you can also get some cash, which can immediately improve the lives of those who participate in the change. If the local owner can choose to guarantee the right to live in the next fifty years, and not get the land but only the house, and get an extra house, and can also exchange it for a sum of cash, wouldn’t this be quite attractive to a certain extent?


High-street development is improved from “quality”

So what is a key direction of the Urban Regeneration Bill?

      First, we hope to use Super Block units for full-street development.

      Second, we need to review the living functions, redo the configuration of public facilities, and create a living possibility that meets future needs. The new houses will adopt a dual-track system of private property rights and use rights, and use real estate securitization to allow all residents to become villagers and share the benefits of development. Alternatively, we can also abandon the all-inclusive rewards and only provide moderate subsidies. The additional volume and benefits created in the city center should be used to provide financial resources for the reconstruction of areas with lower housing prices. The development should be implemented in phases and on a rolling basis, and sufficient intermediate housing should be provided nearby. When our urban regeneration bill matures and is put on the road, The current urban renewal rewards should be withdrawn at sunset to buffer the win-win situation.
      Third, if the aforementioned initiatives can be implemented, we need to include a large amount of private capital.

      Fourth, the infringement of the rights and interests of the original residents is minimized, making enforcement more smooth and successful. Through large-scale regional development, various types of housing possibilities can be created, allowing everyone to have a variety of housing choices.

      Fifth, we can re-examine the urban capacity of public facilities and implement efficient urban renewal and improvement to revitalize old neighborhoods and achieve sufficient supply of people’s housing needs. Only in this way can housing prices be effectively stabilized to achieve residential justice.


Do your best to realize your urban dream

To sum up, why is it difficult to promote urban renewal now? The first is financial factors, and the second is insufficient public welfare and excessive infringement of human rights. In fact, these have a historical background and systemic flaws and context. If we can really implement the ideal of urban regeneration, we need to use a new supporting model to maximize public welfare while minimizing the infringement of human rights, making the impossible possible in the past. We must work together to make a sweet dream for our city and our urban future.

Improving young people’s living conditions starts with your own efforts and creates a new type of social investment with “affordable homes”!

Zhang Hanwen, secretary-general of Taiwan Believe in the Times Development Association, said: After many young people come to Taipei to study, they want to stay in this city and continue to work hard. They feel that there are more development opportunities here. Given the housing prices in the Shuangbei area, more than half of his monthly salary is used to pay rent. As long as the apartment is in a good location, the landlord will not worry about not being able to rent it out, so this is a city where tenants have little room for negotiation.


     Taiwan believes that the Times Development Association advocates starting with ourselves when it comes to youth. Therefore, the association rented an apartment in Taipei City near Zhongshan Junior High School Station and transformed it into a Japanese-style room. The landlord rents it to the association at market price, and the association lowers the rent and then rents it to young people. When applying, all young people must not only introduce their background, but also propose a social innovation plan. Therefore, we have made a social investment by reducing rents so that young people’s talents can be invested in social innovation. In practice. Taiwan believes in a project the Times Development Association calls “affordable homes.”

    “Change starts with me” is actually a mentality. What we are doing is because we are aware of this problem, so we set out to make changes in the way we can.

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