To combat the national crisis of a declining birthrate and accelerate the renewal of aging urban structures, the Executive Yuan has approved a draft amendment to the Statute for Expediting Reconstruction of Urban Unsafe and Old Buildings (the “Ordinance”). This legislative update introduces two pivotal shifts that will fundamentally reshape real estate development strategies in Taiwan. 

1. Transition to a Permanent Statutory Framework

Currently, the Ordinance is scheduled to sunset at the end of May 2027. Recognizing that over half of the residential buildings nationwide are over 30 years old, the new draft removes the expiration date. By transitioning the Ordinance into a permanent framework, the government aims to provide long-term regulatory certainty for the market. 

To ensure a smooth transition, the draft incorporates safeguarding clauses allowing applications submitted before the original deadline to utilize previous regulations. It also introduces critical tax incentives, including a 40% reduction in Land Value Increment Tax and Deed Tax, while empowering local governments to enact autonomous ordinances to streamline the verification of legal buildings. 

2. Introduction of Density Bonuses for “Marriage and Childrearing Housing”

In alignment with national demographic strategies, the amendment introduces a public welfare mechanism involving “Marriage and Childrearing Housing.” 

Under the new rules, reconstruction projects with a base area of 500 square meters or more that donate a portion of the development as social housing—specifically reserved for newlywed couples (married within two years) or families with minor children—will be eligible for an additional density bonus (Floor Area Ratio, or FAR) of up to 15%. 

 

Crucially, this bonus is exempt from standard statutory FAR ceilings: 

・Residential Reconstruction Projects: Can achieve a maximum total density bonus of 1.45 times the base FAR. 

・Commercial Reconstruction Projects: Can achieve a maximum of 1.35 times the base FAR. 

Furthermore, the government intends to expand the statutory allocation of these “Marriage and Childrearing” units from the current 20% to 40% of the total social housing stock. 

Firm Commentary 

This “donation-for-bonus” model is not exclusive to old building renewals; it is planned to extend similar mechanisms to vacant land developments and urban renewal projects. 

For developers and property owners, these changes significantly boost the commercial viability of medium-to-large reconstruction sites. We highly recommend that stakeholders closely monitor the legislative progress during this legislative session and conduct early feasibility assessments to capitalize on these newly structured density incentives and development benefits.