Loan Limits for Non-Homeowners Increased... Comprehensive Summary of Real Estate Policies in the Second Half of the Year

Easing Requirements for Mortgage Loans for Ordinary Citizens and Actual Buyers and Expanding Support for Housing-Vulnerable Groups
Pre-Subscription for 3rd Phase New Towns 1st to 4th Rounds from July to December

[Asia Economy Reporter Onyu Lim] As the government repeatedly announces measures to stabilize the housing market and increase supply, the market is showing a wait-and-see attitude due to the increased burden of capital gains tax surcharges on owners of two or more homes starting in June. Zigbang has summarized the newly introduced or revised real estate policies that will take effect in the second half of the year to highlight potential changes in the real estate market.

Increased LTV Benefits for Mortgage Loans to Non-Homeowners: 10%p → 20%p (Effective July 1)

The number of non-homeowner actual demanders eligible for preferential mortgage loan benefits to purchase their own homes will increase. The combined income threshold for couples is raised from 80 million KRW to 90 million KRW, and first-time buyers can qualify for loans up to under 100 million KRW. The housing price criteria are also relaxed: in speculative overheated districts, from 600 million KRW or less to 900 million KRW or less, and in regulated areas, from 500 million KRW or less to 800 million KRW or less.

Additionally, the Loan-to-Value (LTV) preferential rate will be expanded from 10 percentage points (p) to up to 20 percentage points. For homes priced between 600 million and 900 million KRW in speculative overheated districts, the LTV will be 50%, and for homes priced between 500 million and 800 million KRW in regulated areas, it will be 60%, reflecting a 10 percentage point increase. However, considering the impact on household debt and the market, the maximum loan limit is capped at 400 million KRW.

Reduced Jeonse Deposit Guarantee Fee for Youth and Newlyweds to 0.02% per Year (Effective July 1)

To reduce housing cost burdens for young people, the maximum per-person limit for youth-tailored Jeonse deposit guarantees will be raised from 70 million KRW to 100 million KRW, and the guarantee fee will be lowered from 0.05% per year to 0.02%. The supply scale limit (total 4.1 trillion KRW) will also be abolished.

Strengthened Acquisition Criteria for Business Land Eligible for Capital Gains Tax Reduction (Effective July 1)

To prevent land ownership for speculative purposes, farmland used for weekend or experiential farming will be excluded from business land. Land acquired through negotiated purchase or expropriation for public interest projects must have been acquired at least five years before the official announcement date to be recognized as business land. Previously, land acquired at least two years before the announcement was recognized as business land; this criterion has now been tightened. The same standard applies under the Corporate Tax Act.

Biannual Review for Designation and Cancellation of Speculative Overheated Districts (Effective July 14)

To stabilize housing prices, speculative overheated districts have been designated or canceled annually through the Residential Policy Deliberation Committee. This cycle will be shortened to a 'half-year' basis, aligning with the schedule for regulated areas.

New Public Redevelopment and Public Reconstruction Types Added to Redevelopment Projects (Effective July 14)

If residents agree, public institutions such as the Korea Land and Housing Corporation (LH) can participate as project implementers to promote projects under the newly established public redevelopment and public reconstruction types. These new project types will benefit from relaxed regulations on floor area ratio and standards for securing urban parks and green spaces.

First Pre-Subscription for 3rd Generation New Towns, etc. (Announcement of Resident Recruitment on July 15)

A total of 4,400 households will participate in the first pre-subscription, including 1,100 units in Incheon Gyeyang, a 3rd generation new town, which includes 300 units of newlywed hope town. Other areas preparing for pre-subscription include Namyangju Jinjeop 2 (1,600 units), Seongnam Bokjeong 1 (1,000 units), Uiwang Cheonggye 2 (300 units), and Wirye (400 units). Pre-subscriptions will continue in October (2nd round), November (3rd round), and December (4th round).

Equity Accumulation-Type Sale Housing Added to Public Housing Types (Effective August 19)

The 'equity accumulation-type sale housing' will be added to public housing types. In this model, buyers initially acquire a portion of the housing equity and gradually acquire the remaining equity over a long period (20?30 years). This approach requires lower initial costs and allows for long-term residence. Once all equity is acquired, ownership transfer is possible.

Mandatory Cancellation of Housing Supply Contracts Signed by Fraudulent Means (Effective September 10)

Previously, housing supply contracts signed by fraudulent means 'could be canceled,' but the wording will change to 'must be canceled.' However, bona fide buyers who acquired the housing (or housing occupant status) without knowledge of supply order disruption can avoid contract cancellation by proving their non-involvement.

Exemption of Public Redevelopment Projects from Sale Price Ceiling System (Effective October 14)

To enhance the feasibility of public redevelopment projects, homes supplied through public redevelopment will be exempt from the sale price ceiling system. However, for public redevelopment homes supplied in areas subject to the private land sale price ceiling system, residency obligations (up to 5 years) and resale restrictions (up to 10 years) will apply.