Will 'One-Room' Urban-Type Housing Avoid Tax Bomb... Government Also "Acknowledges Necessity"

Discussion on Amendment Bill at February National Assembly Subcommittee
Ministry of Land, Infrastructure and Transport Also Agrees on the Need for Amendment Bill

[Image source=Yonhap News]

[Asia Economy Reporter Moon Jiwon] A relief measure is expected to be prepared for 'one-room type urban lifestyle housing' with five or more floors, which is classified as an 'apartment' under the Housing Act and the Building Act and thus unable to receive benefits as registered rental housing.

According to the government and the National Assembly on the 28th, an amendment to the 'Special Act on Private Rental Housing,' which excludes one-room type housing from the apartment category under the Private Rental Housing Act, was introduced by Kim Gyoheung, a member of the Democratic Party of Korea, as the main proposer last October, and is scheduled to be discussed at the standing committee of the upcoming extraordinary session of the National Assembly next month.

It is known that there are no significant disagreements within the political circles regarding the amendment. A representative from Kim’s office stated, "We are trying to pass it in the subcommittee as early as next month," adding, "Although we cannot give a definite answer, the situation is positive."

According to the government, the Private Rental Housing Act was amended on August 18 last year to abolish the short-term rental (4 years) and long-term general apartment purchase rental (8 years) systems. Although the registered rental housing system was encouraged to stabilize the rental market, there were continuous criticisms that investments in apartments increased afterward, which rather raised housing prices.

The problem is that urban lifestyle housing is classified as an apartment if five or more floors of the building are used as housing, even if it is a one-room type with a net floor area of 50㎡ or less. Urban lifestyle housing that meets this condition is automatically removed from registered rental housing after the existing rental period expires and cannot be newly registered.

Since rental business operators cannot register, they cannot receive benefits such as reductions in comprehensive real estate tax, causing significant dissatisfaction among landlords who purchased one-room type urban lifestyle housing.

The Ministry of Land, Infrastructure and Transport, the competent authority, is also positively reviewing relief measures. A ministry official explained, "One-room type urban lifestyle housing with five or more floors is classified as an apartment, but it is a space for single-person households and differs from typical apartment types," adding, "We agree on the necessity of the amendment."