[Practical Finance] Priority Qualification for Residents in the Seoul Metropolitan Area Strengthened from 1 Year to 2 Years

Check the Subscription System Changes This Month
Subscription Winning Restriction Period Extended Up to 10 Years

[Asia Economy Reporter Onyu Lim] From mid-this month, the residency requirements for apartment subscription in the Seoul metropolitan area will be strengthened, requiring applicants to exercise caution. This is because the required residency period in the relevant area to qualify for first-priority local residency will be extended from 1 year to 2 years. Additionally, the restriction period for winning a subscription in speculative overheated districts will be extended to a maximum of 10 years regardless of the unit size.

This regulatory tightening follows the recent approval of the "Housing Supply Regulations" submitted by the Ministry of Land, Infrastructure and Transport by the Regulatory Reform Committee of the Office for Government Policy Coordination. As a follow-up legislative measure to the December 16 real estate policy, the core of this amendment is to significantly strengthen the subscription system in the metropolitan area. Considering the time required for the amendment to undergo review by the Legislation Office and be published in the official gazette, it is expected to take effect as early as mid-this month.

First, the minimum residency period to qualify for first-priority housing subscription in speculative overheated districts or large-scale land development districts in the metropolitan area will be extended from 1 year to 2 years. Seoul, Gwacheon, Seongnam Bundang, Gwangmyeong, and Hanam are included in the metropolitan speculative overheated districts, while large-scale land development districts include Gwacheon Knowledge Information Town, Wirye New Town, and Hanam Misa and Gam-il districts. The application standard for the amended regulations is the date of the resident announcement.

The extension of the mandatory residency period is due to the government's assessment that various issues such as false address registration have been occurring. In Gwacheon, for example, the number of detected false address registrations surged from 5 cases in 2018 to about 70 cases last year, according to the government.

When the amendment was announced for public comment, many residents who had moved to the relevant areas last year to meet the first-priority subscription requirements strongly opposed it. They had been preparing to apply for apartments under the private land price ceiling system being offered for the first time this year, but unexpectedly, the residency period requirement was strengthened, causing them to lose their first-priority status. Although there was a possibility of introducing a transitional provision that would exempt those who met the 1-year residency requirement under the existing rules from the new regulations, the government ultimately decided to implement the original plan.

Apartments subject to the private land price ceiling system are expected to be released in July and August. The Ministry of Land, Infrastructure and Transport extended the grace period from the end of April to the end of July due to disruptions in redevelopment and reconstruction association general meetings caused by the COVID-19 pandemic.

Along with the strengthening of residency requirements, the restriction period for winning a subscription will also be extended. Winners of price ceiling housing and housing in speculative overheated districts will be restricted from winning again for 10 years regardless of unit size. Winners in regulated areas will be restricted from winning again for 7 years. Currently, in the metropolitan area, housing units under 85㎡ (exclusive area) in overcrowded station zones are restricted for 5 years, while housing units over 85㎡ in other areas are restricted for 1 year, with the restriction period ranging from a minimum of 1 year to a maximum of 5 years depending on the region.

Regulations will also be implemented to restrict eligibility for residency for 10 years from the date of detection for those who disrupt the supply order through illegal trading of subscription savings accounts or intermediaries, regardless of housing type. Currently, when supply order disruption is detected, subscription restrictions are applied differentially depending on housing type: 10 years for public housing district housing, 5 years for speculative overheated district housing, and 3 years for housing in other areas.