SH Corporation "Property Tax Exemption Needed to Expand Rental Housing Supply"

Suggestions to Ministry of Economy and Finance, Ministry of the Interior and Safety, Ministry of Land, Infrastructure and Transport
2022 Property Tax Burden 69.7 Billion KRW
Property Tax Burden Increased 7.5 Times in 10 Years
Exempting Rental Housing Property Tax Even Overseas

Seoul Housing and Communities Corporation (SH Corporation) announced on the 3rd that it has requested the Ministry of Economy and Finance, the Ministry of the Interior and Safety, and the Ministry of Land, Infrastructure and Transport to exempt holding taxes imposed on rental housing, claiming that these taxes are excessive.

Annual SH Corporation Rental Housing Property Tax (Data=SH Corporation)

SH Corporation pointed out that the holding taxes (property tax and comprehensive real estate tax) imposed on rental housing act as a factor that diminishes the social contribution of rental housing.

Considering the social and economic contributions of rental housing, rent restrictions imposed by the Ministry of Land, Infrastructure and Transport, long-term rental periods, and cases of property tax exemptions overseas, SH Corporation argued that holding taxes should be exempted.

The rental housing owned by the corporation amounts to approximately 135,000 households, and the property tax burden on these increased 7.5 times from 9.3 billion KRW in 2012 to 69.7 billion KRW in 2022.

The gap between the rent of rental housing supplied by the corporation and that supplied in the market currently reaches 1.3 trillion KRW.

Contribution to the Reduction of Housing Costs in SH Corporation Rental Housing (Based on Monthly Rent Conversion Amount). (Data=SH Corporation)

Due to legal restrictions related to rental housing, the corporation rents out permanent, public, and national rental housing at less than 30% of the market price as of 2022.

SH Corporation stated, "In other countries, property tax exemptions are implemented as public support for the operational burden of public rental housing," adding, "In the past, local public corporations such as SH Corporation were also exempt from property tax, but since the 2012 tax law revision, they have been bearing excessive holding taxes."

SH Corporation also claims that the property tax reduction regulations for Korea Land and Housing Corporation (LH) and local public enterprises are being applied unreasonably.

Property tax reductions apply only to private (rental) multi-family housing, and private (rental) housing in the 40 to 85㎡ range receives 25% more property tax reduction compared to public (rental) housing. Despite offering longer rental periods at lower rents in public (rental) housing, greater tax benefits are given to the private sector.

For the same purchased rental housing, LH receives property tax reductions even for detached houses. For areas exceeding 60㎡, LH receives 25% more property tax reduction compared to local public enterprises like SH Corporation.

Kim Heon-dong, President of SH Corporation, said, "SH Corporation operates rental housing at about 30% of market rent due to laws and regulations," and added, "Imposing property tax and comprehensive real estate tax, which is a speculative suppression tax, is an unnecessary regulation on the supply of public housing, and we propose exemption of holding taxes on rental housing to expand the supply of public housing."