Won Hee-ryong: "We will ease regulations but control housing prices"... Ultra-complex housing equation (Comprehensive)

Written Response to the Nominee for Minister of Land, Infrastructure and Transport
"Reconsideration of the 3 Lease Laws, Capital Gains Tax on Repeated Sales, Sale Price Ceiling System, and Taxation"
"However, be cautious not to stimulate housing prices"
"Will announce the housing supply roadmap as soon as possible"

Won Hee-ryong, Chairman of the Planning Committee of the Presidential Transition Committee, is arriving at the Presidential Transition Committee office in Tongui-dong, Jongno-gu, Seoul, on the morning of the 14th. Photo by the Transition Committee Press Corps

Won Hee-ryong, the nominee for Minister of Land, Infrastructure and Transport, reaffirmed his position to thoroughly review the Lease 3 Act, the Excessive Profits Recovery System for Reconstruction (재초환), and the Sale Price Ceiling System (분상제), and to improve excessive tax burdens. However, he emphasized that he would approach this process as cautiously as possible to avoid stimulating housing prices.

In response to questions from Park Sang-hyuk, a member of the Democratic Party of Korea, regarding the direction and policy stance on housing, submitted to the National Assembly ahead of the confirmation hearing scheduled for the 2nd, Won confirmed the policy direction aligned with President-elect Yoon Seok-yeol’s real estate pledges, which focus broadly on expanding supply and easing regulations and tax burdens.

◆ "Reviewing Excessive Profits Recovery System for Reconstruction, Sale Price Ceiling System, and Tax Reforms"

Won first expressed his intention to "carefully review whether the current systems are appropriate" regarding real estate regulations such as the Excessive Profits Recovery System for Reconstruction and the Sale Price Ceiling System. Regarding the Excessive Profits Recovery System, he said, "I believe it is necessary to appropriately recover excessive capital gains or development profits generated from reconstruction and redevelopment," but added, "I will carefully examine whether the current system is appropriate."

Regarding the Sale Price Ceiling System, he acknowledged, "I understand that some side effects, such as a decrease in sales in certain areas, have occurred," and said, "I will look into points that need to be supplemented in the pricing process and review improvement measures."

He also emphasized the need for reform in real estate-related taxation. In response to questions about the Comprehensive Real Estate Holding Tax (종부세), he replied, "Since there have been inconveniences to the public due to excessive tax burdens, I believe it is necessary to normalize the tax burden to an appropriate level through reasonable tax reform measures."

Regarding the abolition of the Comprehensive Real Estate Holding Tax or its integration with property tax, he stated, "Under the broad policy goal of housing stability, I will work with tax authorities to develop reasonable tax reform measures by comprehensively considering the housing market situation, tax efficiency, equity, and tax revenue."

According to the Seoul Real Estate Information Plaza on the 27th, the number of apartment transactions in Seoul in March totaled 1,401, marking the highest volume in five months since October last year (2,197 transactions). The decline that had continued since last year has turned into an increase after eight months, suggesting that expectations for real estate deregulation by the next government and the influence of the presidential election played a significant role. The photo shows Seoul apartments as seen from Namsan on that day.

◆ "Side Effects such as Jeonse Price Increases Due to Lease 3 Act... Seeking Improvement Plans"

Regarding the Lease 3 Act, which is approaching its two-year implementation mark, he responded, "We will closely monitor the rental market situation and seek fundamental improvement measures through sufficient public discussion and opinion gathering processes."

The Lease 3 Act mainly grants tenants the right to request contract renewal (for 2 years) and introduces a rent ceiling system (within 5% of the existing rent). Won acknowledged the purpose of the Lease 3 Act as "introduced to protect tenants," but pointed out, "Since it was introduced as a direct price regulation policy without sufficient discussion, it caused various side effects such as increases in Jeonse prices and market distortions." He also diagnosed that the Lease 3 Act, introduced during a phase of rising housing prices, affected not only Jeonse price increases but also instability in the sales market.

Regarding the proposal to extend the lease contract period from the current '2+2 years' to '2+2+2 years' or '3+3 years,' he opposed it, saying, "There is a high risk that side effects such as a reduction in available listings will worsen."

◆ "However, Approaching Cautiously to Avoid Stimulating Housing Prices... Greenbelt Release to Be Decided Carefully Even If Necessary"

Won emphasized a cautious approach to minimize side effects such as sudden housing price surges that may arise during institutional improvements and regulatory easing.

He explained, "There may be side effects of price instability when easing redevelopment and reconstruction regulations while the market is still experiencing overheating effects," advocating this cautious stance. He added, "While it is necessary to rationally improve safety inspection standards to promote supply in urban areas, since many apartments are subject to safety inspections and this could significantly impact the market, we plan to proceed by comprehensively considering economic conditions, market situations, and the interrelations of regulations."

Regarding the prospect of releasing the Greenbelt in the Gangnam area of Seoul, he also expressed a cautious stance. He said, "The Greenbelt is an asset for future generations, and systematic management and preservation are necessary so that all citizens can enjoy its benefits." He added, "If appointed as minister, I will uphold the principle of preserving the Greenbelt, but if release is inevitably necessary, I will make a careful decision after sufficient consultation with local governments and relevant experts."

In the past five years, as housing prices have soared, the proportion of apartments that middle-income households can afford to buy in Seoul has sharply declined from 16.5% to 2.7%. For middle-income households attempting to purchase a home in Seoul even with a loan, the number of apartments they could buy has nearly vanished; five years ago, they could afford about 16 to 17 out of every 100 units, but last year, fewer than 3 units remained affordable.

◆ "Announcing a Housing Supply Roadmap as Soon as Possible... Maximizing Use of Private Rental Housing"

Regarding supply expansion, he announced a swift response, saying, "Sufficient housing supply is important." He stated, "If appointed minister, I will present a predictable and reliable housing supply roadmap as soon as possible."

President-elect Yoon has proposed 'supplying 2.5 million houses during his term' as a key real estate pledge. In this regard, Won emphasized, "It is important to strengthen the private sector’s supply function to ensure sufficient supply mainly in preferred urban areas and to expand support for vulnerable groups such as youth."

Won added, "First, we will actively identify sites mainly in preferred urban locations and promote revitalization of maintenance projects, streamline procedures, and enhance project feasibility to stimulate private sector supply."

He also forecasted revitalization of the private rental market, saying, "It is necessary to supply a large number of quality rental houses by utilizing the private registered rental system." He emphasized, "For the actual housing stability of non-homeowners and tenants, it is necessary to utilize the private registered rental system along with the supply and qualitative innovation of public rental housing."

He stated, "To construct and supply private rental housing with mandatory rental periods and rent restrictions, it is necessary to provide appropriate incentives," but also expressed the view that "excessive profits and privileges are undesirable."

Won acknowledged, "I am fully aware of the inconveniences and anxieties experienced by the public due to rapid housing price increases and widening asset gaps, as well as the despair felt by the younger generation. I feel a heavy responsibility." He promised, "If appointed, I will gather wisdom from the National Assembly, the market, and experts to implement policies that meet the public’s expectations."