Dealing with Construction Permits in
Korea, Rep.
Listed below is detailed summary of the procedures, time and costs to build a warehouse —including obtaining necessary licenses and permits, completing required notifications and inspections and obtaining utility connections.
The information appearing on this page was collected as part of the Doing Business project, which measures and compares regulations relevant to the life cycle of a small- to medium-sized domestic business in 183 economies. The most recent round of data collection for the project was completed in June 2011.
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Building a warehouse
-
Estimated Warehouse Value:
KRW 702,324,000
- City: Seoul
| No. |
Procedure |
Time to Complete |
Associated Costs |
| 1 |
Request and obtain proof of ownership of land
Agency: Property Register
|
1 day
|
KRW 800
|
| 2 |
Purchase and sale of National Housing Bonds (NHB)
To qualify for a building permit, BuildCo must purchase National Housing Bonds (NHBs) at any commercial bank. The NHB is calculated at a rate ranging from KRW 600 to KRW 1,300 per square meter, depending upon the structure of the warehouse. If the warehouse is constructed in steel frame, the rate of KRW 1,300 per square meter is applied. The company can either receive the money paid for the NHBs upon maturity or sell them at a discount (the discount is 10%). Upon purchase, the bank issues a receipt, which must then be presented to the Building Authorities. The cost is calculated as follows: KRW 1,300 x 1300.6 sq.m = KRW 1,690,780. However, many sell the NHBs immediately at a discount of 10%, which brings the actual cost incurred by the company to KRW 169,078.
Agency: Commercial Bank
|
1 day
|
KRW 169,078
|
| 3 |
Request and obtain building permit
BuildCo must submit an application for a building permit to the County (Ku) Office of Construction. The application must include (a) the size of construction lot; (b) documentation showing BuildCo's ownership or the right to use the construction lot; and (c) basic design drawings, which must specify the approximate location of the water pipes, sewage, septic tank, electrical facilities, and telephone lines. Once the application for the building permit with the relevant documents is filed with the licensing authority, this authority forwards the design drawings to the relevant regulatory agencies (such as the sewerage department and the fire department). Thus, it is not necessary for the company to obtain separate project clearances from these departments.
Under the Article 10 of the new Building Code, anyone who intends to construct a building may opt for a fast-track procedure and apply for an "advance decision regarding building permit" before applying for a building permit. If an advance decision is obtained for the construction, the builder must separately apply for and obtain a building permit for the construction. However, when the advance decision is obtained, the relevant approval for the development or re-characterization of land (such approval is needed in certain zoning areas under several relevant laws) is deemed to be obtained. This effect of the advance decision is valid for 2 years from the date of issuance, before the builder applies for building permit itself. In addition, it is possible to submit simultaneous applications for an advance decision and for the traffic and environment impact assessment procedures, and the like, if those procedures are necessary. Accordingly, if the builder obtains an advance decision before applying for the building permit, the time before the construction may be reduced more or less. However, this has not worked well in practice and many companies follow the traditional way.
According to the Standard for Civil Petitions Treatment published by the Korean Government on December 30, 2005, the duration for obtaining a building permit for a two-story, 1,300-square-meter building is estimated to be 3–14 days, subject to certain circumstances, including whether the work is performed by an agent (a certified architect). The duration can take a few days longer, as the case may be.
Before construction work begins, the company informs the authority thereof. BuildCo must present a notification application, including (a) a copy of all relevant contract(s) between the relevant parties (owner, construction company, architect, building inspector, etc.); and (b) the design drawings, which must specify the location of the water pipes, sewage, septic tank, electrical facilities, and telephone lines.
Agency: County (Ku) Office of Construction
|
9 days
|
KRW 245,000
|
| 4 |
Hire a certified inspector
A certified inspector conducts inspections throughout the period of construction. If the company does not hire a certified inspector during construction, there is a penalty of up to 2 years’ imprisonment or a fine of up to KRW 10 million. The inspector is independent of the company. The frequency of inspections varies depending on the size and cost of construction. Generally, an inspection takes place if the inspector and the company deem it necessary. However, in some instances, the contract between the company and the inspector contains a clause specifying the frequency of inspection. There must be at least two inspections throughout the construction, during which the construction work does not stop.
The cost of KRW 9,059,980 is calculated by multiplying the value of the project, KRW 702,324,000, with the relevant rate of 1.29%, in accordance with the Regulation for Scope of Architect Services and Fee Standard.
|
1 day
|
KRW 9,059,980
|
| * 5 |
Request and obtain electricity inspection certificate
The Electricity Business Act requires that anyone who installs electrical facilities apply for an inspection by the relevant authority before using the facilities. According to the relevant authority, the inspection should be completed in a day. The cost of inspection is calculated as follows: KRW 90,000 + Additional fee of KRW 52,500 (140 kilowatts x KRW 375/Kilowatts).
Agency: Korea Electrical Safety Corp.
|
1 day
|
KRW 142,500
|
| * 6 |
Request and obtain telephone inspection certificate
The Information Telecommunication Construction Business Act requires that an inspection certificate be obtained from the relevant authority for information or technology facilities before the facilities are used. According to the act’s enforcement provision, the time to complete the inspection should be 14 days, and the cost is KRW 40,000. There is no penalty for the authorities if the time line is missed, but they generally meet the deadline.
Agency: Korea Telecom Corporation
|
1 day
|
KRW 40,000
|
| * 7 |
Request and obtain fire inspection certificate
When the company applies for an occupancy permit, the approval authority will ask the Fire Department to inspect the building. The Fire Department will issue an inspection certificate after inspection of the premises. The average waiting time is a week.
Agency: Fire Department
|
1 day
|
no charge
|
| 8 |
Request and obtain occupancy permit and request final inspection
The company must apply for an occupancy permit within 7 days of the completion of construction. The occupancy permit is issued after the inspections mentioned in the next procedures.
|
7 days
|
no charge
|
| * 9 |
Receive on-site inspection from local government
Acquisition tax must be paid within 30 days of receiving the occupancy permit. The acquisition tax is 2% of the value of the project (in this case, KRW 702,324,000), amounting KRW 14,046,480. The farming and fishing village special tax of 10% of the acquisition tax (in this case, KRW 1,404,648) should also be imposed. The total tax is KRW 15,451,128.
|
1 day
|
no charge
|
| 10 |
Register the building with the court registry
BuildCo must register the warehouse within 60 days from the inspection completion date. The cost of registration is composed of three parts: (a) registration tax for title preservation, which is 0.8% of official price of the building (in this case, the value of the project amounting KRW 702,324,000); (b) education tax, which is 20% of the registration tax; and (c) stamp tax, which is KRW 14,000 per land parcel.
Agency: Court Registry
|
4 days
|
KRW 6,756,310
|
| * 11 |
Request and receive connection to water and sewage services
Agency: Korea Water Company
|
7 days
|
KRW 2,600,000
|
| * 12 |
Request and receive connection to telephone services
Agency: Korea Telecom Corporation
|
1 day
|
KRW 60,000
|
* Takes place simultaneously with another procedure.