[Asia Economy Reporter Lee Chun-hee] Starting from the 17th, the government’s measure to curb overheating in the subscription market by strengthening the residency requirement from 1 year to 2 years for subscription applications in the metropolitan area will be implemented.
The Ministry of Land, Infrastructure and Transport announced on the 16th that as a follow-up measure to the December 16 real estate policy announced last year, a partial amendment to the "Housing Supply Regulations," which includes strengthening the residency requirements for priority supply applicants in the relevant areas and extending the restriction period for re-winning, will take effect from the 17th. These changes will apply to complexes that submit approval applications for resident recruitment from the 17th onward.
The strengthened residency requirement is a measure that extends the local first-priority residency requirement for housing subscriptions in speculative overheated districts in the metropolitan area or large-scale land development districts over 660,000㎡ from 1 year to 2 years. This applies not only to speculative overheated districts such as Seoul and Gwacheon-si in Gyeonggi Province but also to Gwacheon Knowledge Information Town and the upcoming 3rd New Towns.
Last year, when the government saw a sharp rise in Jeonse prices in Gwacheon due to high expectations for the Knowledge Information Town sales in the second half of the year, it quickly introduced the residency requirement strengthening as a remedy. According to the Korea Real Estate Agency’s monthly apartment Jeonse price index, Jeonse prices in Gwacheon surged by as much as 11.0% over three months in the fourth quarter (October to December) of last year.
On the other hand, after the residency requirement strengthening was announced through the December 16 policy, combined with the policy effect, the move-in of the large complex "Gwacheon Prugio Summit" with 1,571 households, and market contraction due to the spread of COVID-19, Jeonse prices in Gwacheon began to decline significantly from February. As of the first quarter (January to March) of this year, prices decreased by 0.2%, indicating a downward stabilization trend.
Regarding the strengthening of residency requirements, there have been increasing voices, especially from expatriates who have been unable to meet the residency requirements due to overseas assignments, demanding a ban on retroactive application or exceptions for special cases. However, the Ministry of Land, Infrastructure and Transport stated, "The same regulations apply to those working in provincial areas," and emphasized its determination to enforce the rule by saying that retroactive application is difficult to consider since it is a regulation on 'expected benefits' rather than on already applied subscriptions.
Another issue has also emerged surrounding this amendment. During the review process of this amendment, the Regulatory Reform Committee of the Office for Government Policy Coordination recommended as an attached opinion to consider introducing the residency period requirement as a point-based system. The Ministry of Land, Infrastructure and Transport has expressed its intention to take time for a long-term review of this recommendation.
This amendment also includes an extension of the re-winning restriction period. Currently, winners of housing under the price ceiling system or in speculative overheated and adjustment target areas are restricted from winning other housing subscriptions for up to 5 years. However, going forward, the restriction period will be extended to up to 10 years for housing under the price ceiling system or in speculative overheated districts, and up to 7 years for housing in adjustment target areas.
The Ministry plans to apply the longer restriction period when overlapping regulations apply, such as for housing under the price ceiling system within adjustment target areas. This provision will also apply only to complexes that submit resident recruitment approval applications from the 17th onward.
Restrictions on subscription application qualifications for those who disrupt the supply order by trading or brokering subscription savings accounts or obtaining new housing through fraudulent means will also be strengthened. For public housing district housing, qualification restrictions will last 10 years from the date of detection, while for housing in speculative overheated districts and other areas, which currently have restrictions of 5 years and 3 years respectively, the restriction period will also be extended to 10 years from the date of detection. This clause will apply to those detected for disruptive acts from the 17th onward.
Hwang Yoon-eon, Director of the Housing Fund Division at the Ministry of Land, Infrastructure and Transport, said, "With this regulation amendment, we expect a fair subscription order to be established and the chances of winning for genuine demanders who have lived longer in the relevant areas to increase. We will continue to do our best to operate a subscription system centered on genuine demanders in the future."
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