[News Terms] "If Abandoned Houses Are Neglected, 'Vacant House Tax' 5 Million Won"

Discussions are expanding on the introduction of the so-called 'Empty Homes Tax,' which imposes taxes on homeowners who leave their vacant houses unoccupied for extended periods. A recent amendment to the 'Rural and Fishing Village Maintenance Act' that imposes a compliance penalty of up to 5 million KRW on homeowners who neglect vacant houses has also passed the National Assembly.

The Empty Homes Tax refers to a tax levied on vacant houses that are owned but neither used nor rented out. It is primarily aimed at stabilizing the real estate market and encouraging concentrated investment. This system is already in place in countries such as the United Kingdom, Canada (Vancouver, Toronto), and Japan. In the UK, local taxes are increased by up to 300% on homes vacant for more than two years, while Vancouver raised its empty homes tax from 1.25% in 2020 to 3% in 2021 and 5% in 2022.

Domestically, the problem lies with old houses or buildings left uninhabited in rural or farming villages and underdeveloped old downtown areas. Vacant houses in rural areas have been steadily increasing, reaching 66,024 households nationwide last year. Among these, 60% are in urgent need of demolition. Neglected vacant houses can be misused as illegal dumping sites or crime scenes, and due to their dilapidated and unmanaged state, they are exposed to risks such as collapse.

However, concerns have been raised that the Empty Homes Tax may infringe on homeowners' property rights, and even if the tax is imposed, there are limitations in solving the vacant house problem if owners neither sell nor rent out their properties.

The recently amended Rural and Fishing Village Maintenance Act gained momentum from the proposal by Park Jeong-hyun, the mayor of Buyeo County, Chungnam Province. On June 12, at the Chungnam Mayors and County Governors Council meeting, Mayor Park proposed the introduction of an Empty Homes Tax that imposes local taxes on neglected vacant houses. The amendment stipulates that if the owner fails to comply with orders such as demolition for vacant houses with high risks of safety accidents and landscape damage, the mayor, county governor, or district head may impose a compliance penalty of up to 5 million KRW up to twice a year. If the cost incurred by the authorities for demolition or other measures exceeds the compensation paid, the difference can be collected from the owner. Conversely, if the owner voluntarily refurbishes the vacant house, standards such as building coverage ratio and floor area ratio may be relaxed.

Previously, in 2020, the government partially amended the Rural and Fishing Village Maintenance Act to allow local governments to proceed with demolishing vacant houses, but it was difficult to manage the rapidly increasing number of vacant houses with local administrative power alone. The implementation standards were also insufficient, raising concerns about lawsuits during forced demolition processes, which led local governments to take a passive approach.