Ruling and Opposition Parties Agree on 3-Year Exemption for Actual Residence Obligation Ahead of General Election in About 50 Days

Prospect of Housing Act Amendment Passing at Land Committee Bill Subcommittee on 21st
Government Announces 'Abolition of Actual Residence Obligation' After 1 Year and 2 Months

The ruling and opposition parties have agreed to hold a meeting of the National Assembly Land, Infrastructure and Transport Committee's Subcommittee on Land Bills to process the amendment to the Housing Act that postpones the obligation of actual residence.

[Image source=Yonhap News]

According to the Land Committee on the 19th, the amendment to the Housing Act will be discussed at the Land Bills Subcommittee meeting scheduled for the morning of the 21st.

The ruling and opposition parties have reached a consensus to ease the start time of the actual residence obligation from the current 'earliest possible move-in date' to 'within 3 years after the initial move-in.' This means that tenants will be allowed to lease the property once before moving in.

Accordingly, the amendment is likely to pass the Land Committee subcommittee on the 21st, the plenary session on the 22nd, and then the plenary session of the National Assembly scheduled for the 29th of this month. This comes 1 year and 2 months after the government announced the abolition of the actual residence obligation along with the relaxation of resale restrictions on January 3 last year. As of the end of last month, there are 77 complexes with 49,766 households subject to the actual residence obligation. Among these, 11 complexes with 6,544 households have already started move-ins.

With the 3-year postponement of the actual residence obligation, those who were in situations where they had to change or extend existing lease contracts or take out excessive loans to move into new apartments can now breathe a sigh of relief. The actual residence obligation is a regulation that requires winners of apartment subscriptions subject to the price ceiling system to reside directly for 2 to 5 years from the time of move-in. It was introduced in 2021 to prevent 'gap speculation,' where buyers purchase homes with leased deposits.

As the sales market froze from the second half of 2022, the government announced through the '1·3 Real Estate Measures' that it would abolish the actual residence obligation applied to apartments under the price ceiling system in the metropolitan area. However, criticism arose that the abolition was intended to 'save Dunchon Jugong,' and the Democratic Party opposed the amendment to the Housing Act, fearing it would encourage gap investment, leaving the amendment stalled in the Land Committee for over a year.

Amid growing confusion among those subject to the actual residence obligation and increasing demands to promptly process the bill ahead of the general election, it appears that the ruling and opposition parties have found a compromise with a '3-year postponement.'