[6·17 Real Estate Measures] Expansion and Strengthening of Move-in Obligation Requirements to All Regulated Areas

Hong Nam-ki, Deputy Prime Minister and Minister of Economy and Finance, attended the meeting of related ministers (Nokshil meeting) on the 17th at the Government Seoul Office in Gwanghwamun, Seoul, to review recent real estate market trends and discuss response measures. (Photo by Yonhap News)

[Asia Economy Reporter Kim Hyo-jin] Starting from the 1st of next month, the actual residence requirement applied when obtaining mortgage loans (jumdae) in regulated areas will be significantly strengthened.

According to financial authorities on the 17th, the government's "Management Plan for Housing Market Stabilization" released on the same day includes a provision that requires non-homeowners who receive mortgage loans to purchase a house in all regulated areas, including speculative areas and speculative overheating districts, to move in within 6 months regardless of the housing price.

Under current regulations, those who receive mortgage loans to purchase houses priced over 900 million KRW in speculative areas and speculative overheating districts must move in within one year. In the case of adjusted target areas, they must move in within two years. This new plan strengthens both the areas subject to the move-in obligation and the period.

The regulation for one-homeowners who receive mortgage loans in speculative areas and speculative overheating districts, requiring them to dispose of their existing home and move into the newly purchased home within one year, has been supplemented so that in all regulated areas, those who receive mortgage loans must dispose of their existing home and move into the newly purchased home within 6 months.

A new actual residence requirement will also be imposed on borrowers using the Bogeumjari Loan. Currently, borrowers using the Bogeumjari Loan are not obligated to move in, but from now on, if they receive the Bogeumjari Loan to purchase a house, they must move in within 3 months and reside for more than one year. Failure to comply will result in loan recall.

Restrictions on the use of jeonse loan guarantees to prevent "gap investment" have also been significantly strengthened. The current regulation restricting jeonse loan guarantees for owners of houses priced over 900 million KRW has been changed to include newly purchased apartments priced over 300 million KRW in speculative areas and speculative overheating districts as subjects of guarantee restrictions.

If a jeonse loan is taken and then an apartment priced over 300 million KRW in speculative areas or speculative overheating districts is purchased, the loan will be immediately recalled.

The government also lowered the jeonse loan guarantee limit of the Housing and Urban Guarantee Corporation to 200 million KRW for one-homeowners, based on the judgment that the guarantee limits vary by guarantee institution and are used for gap investment purposes by one-homeowners.