"Lee Jae Myung's Real Estate Policy: Strengthening Housing Welfare and Supply Focused on Actual Demand [Real Estate AtoZ]"

Public-Led Housing Supply Bills Draw Attention
Heightened Awareness of Jeonse Fraud and Related Damages
"Avoid Tinkering with Real Estate Taxes as Much as Possible"
Punitive Real Estate Taxation Likely to Be Avoided

If Lee Jae Myung, former leader of the Democratic Party of Korea and current presidential primary candidate, is elected, his real estate policy is expected to focus on "supply policies centered on actual demand and strengthening housing welfare." Analyzing Lee's past statements and various bills proposed by the Democratic Party reveals that his policy direction centers on public-led housing supply, enhanced housing welfare for young people, and stabilization of rental markets. This stands in contrast to the current administration, which has prioritized deregulating the reconstruction of first-generation new towns and encouraging private construction companies to supply housing. Notably, Lee has recently expressed skepticism about punitive taxation, suggesting that a pragmatic approach to real estate taxation is also likely.

Former Democratic Party presidential candidate Lee Jae Myung declared his candidacy for the presidential election on the 10th through a video, emphasizing pragmatic governance that transcends factional conflicts. Lee stated, "The core cause of social conflicts arising from the internal strife is economic polarization, where wealth is concentrated in too few places," adding, "The starting point of policy should not be who it is for, but whether it is truly useful and necessary as the highest standard." Lee Jae Myung TV

◆ Speeding Up Public Housing Supply = The most anticipated aspect of Lee Jae Myung's real estate policy for this presidential election is his housing supply policy. In February, Lee stated on YouTube, "We need to increase the supply of real estate as rationally as possible."

Lee is expected to actively promote the supply of public housing. Among the bills proposed by the Democratic Party during the Yoon administration, several aim to strengthen the public sector's role in boosting housing supply. One such bill, currently under review in the National Assembly, exempts feasibility assessments for public housing projects worth over 50 billion won undertaken by local public institutions. While such assessments are intended to prevent indiscriminate public housing supply, Korea Land and Housing Corporation (LH) is already exempt. The bill's intent is to extend this exemption (which typically takes a year) to local development corporations as well, thereby facilitating public housing supply. Representative Ahn Tae Jun introduced this measure as part of a bill under the Ministry of Land, Infrastructure and Transport and an amendment to the Local Public Enterprises Act in January, both of which are under committee review.

Representative Lee Chun Seok introduced a bill in November last year to delegate the authority to designate public housing districts from the current limit of less than 300,000 square meters to up to 3.3 million square meters to provincial governors. The bill, now under review in the National Assembly, allows for the delegation of ministerial authority to local governments when national-level planning and coordination are unnecessary, aiming to enhance the speed and responsiveness of public housing supply.

Other pending bills align with Lee's long-standing emphasis on expanding housing welfare, such as basic housing and public self-owned housing. Representative Jung Sung Ho is pushing for an exemption from the comprehensive real estate tax for long-term public rental housing owned by public institutions like LH and Seoul Housing & Communities Corporation (SH Corporation). Representative Moon Jin Seok has proposed going further by exempting all rental housing owned by public housing operators from taxation. These bills aim to reduce the tax burden on LH and similar entities, thereby further activating public housing supply.

The supply of housing in the third-generation new towns is also expected to be a key policy issue. A real estate policy advisor from the Democratic Party's policy body, the "People's Livelihood Roundtable," chaired by Lee, said, "There will likely be a strong push to supply housing in the third-generation new towns. If the land development cost is recalculated, it is possible to lower the sale price by about 10%." He explained, "For example, if the sale price is 500 million won, it could be reduced to around 450 million won, significantly easing the perceived burden for newlyweds and young people."

◆ "Blocking Jeonse Fraud at the Source" - Youth Housing Emerges as a Key Policy Task = Solving the housing problems of young people is highly likely to become a core policy task for the next administration. The issue of jeonse (lump-sum rental deposit) fraud is one that Lee personally pledged to address during his tenure as party leader. Combined with bills the Democratic Party has already prepared, institutional reforms and legislative protections for victims could be pursued simultaneously from the start of the new administration. Separately, the National Assembly's Land Law Review Subcommittee recently passed a bill extending the special law supporting victims of jeonse fraud and providing financial and housing support by two more years, until the end of May 2027.

An advisor to the People's Livelihood Roundtable stated, "Until now, the government has only provided temporary measures for young people victimized by jeonse fraud, but Lee has a clear awareness of the need for structural solutions. During policy discussions, there were concrete requests for youth-targeted housing policies." The advisor added, "Given that the presidential candidate is personally overseeing this issue, there is an expectation for a different level of execution than before."

◆ "Only Lost Votes" - From Punitive Taxation to Pragmatism = Punitive taxation related to real estate is expected to be avoided. Lee recently said on YouTube, "We should refrain from tinkering with real estate taxes as much as possible." He believes that policies with low public acceptance, such as imposing higher comprehensive real estate taxes or introducing a land ownership tax, only increase tax resistance. He stated, "The land ownership tax only lost us votes due to its low acceptance," effectively signaling its abandonment. A pragmatic approach to adjusting the tax burden for actual demanders and public entities is also expected. Lee has consistently emphasized his philosophy: "Protect actual demanders, and hold the public sector accountable."

Bills in line with this direction are pending in the National Assembly. Representative Lim Kwang Hyun's bill, which allows joint owners of a single home to defer comprehensive real estate tax payments, passed the National Assembly in February. Representatives Jung Sung Ho and Moon Jin Seok are also pushing for comprehensive real estate tax exemptions for public rental housing. These measures aim to reduce the tax burden on genuine homeowners, consistent with Lee's recent statement: "There is no need to provoke tax resistance among people who own only one home."

◆ Real Estate Project Financing (PF) Restructuring Expected...Possible Adjustment of Subscription System = It is highly likely that restructuring will be carried out for insolvent real estate project financing (PF). Experts believe that while the Yoon Suk Yeol administration responded mainly by providing liquidity due to concerns over construction company insolvency, a Lee administration would likely shift toward recognizing and settling losses. In December 2023, the Democratic Party stated, "Now is not the time to keep PF afloat with taxpayers' money, but to resolve it," emphasizing that developers, construction companies, and financial institutions that pursued excessive development profits should resolve the situation under the principle of self-responsibility. An advisor to the People's Livelihood Roundtable commented on PF restructuring, "This time, on-site clean-up will be implemented in earnest. Over the past year and a half, time was wasted on wordplay over the direction of restructuring, and as a result, the situation has become unsustainable."

Lee Jae Myung, former leader of the Democratic Party of Korea (center), Kim Min Seok, Supreme Council member (left), and Park Chan Dae, acting party leader and floor leader. Photo by Kim Hyun Min

◆ "True Redevelopment Means Residents Can Return" = For reconstruction and redevelopment, a "cyclical maintenance" approach, rather than indiscriminate simultaneous development, is being discussed. This method involves phased maintenance that considers the relocation and return of existing residents. In February, Representative Moon Jin Seok proposed an amendment to the Urban Maintenance Act mandating measures for resident resettlement. The bill requires that resettlement plans be included at every stage, from planning to management and disposition, and allows for floor area ratio incentives based on performance. Moon stated, "Redevelopment should be a means to improve the lives of original residents, and it is necessary to institutionalize resettlement measures effectively." The bill is currently under review by the National Assembly's Land, Infrastructure and Transport Committee.

There are also plans to secure residential space through mixed-use development. The think tank "Growth and Integration" recently announced, "We will develop welfare facilities for residents near subway stations in the form of mixed-use complexes." This move is interpreted as an attempt to integrate public functions into redevelopment projects.

Additionally, some suggest the possibility of adjusting the housing subscription system. This would involve revising the current allocation structure, which is concentrated on specific groups. "While the current subscription system is specialized for young people and newlyweds, the high proportion of middle-aged and older adults in the population structure should also be considered." In February, Representative Yeom Tae Young introduced an amendment to the Special Act on Public Housing, proposing to expand customized support such as care and living assistance for single-person households, including young people and the elderly, even in rental housing built directly by the government.

Lee is also likely to pursue other pledges from the previous presidential election, such as basic housing, high-density development near subway stations, and disclosure of sale prices. Lee has consistently emphasized his position that "every citizen should be guaranteed stable housing, regardless of income or assets."

Meanwhile, the Yoon administration has pushed for bills to expand supply by simplifying reconstruction and redevelopment permits, increasing floor area ratios, and relaxing the price ceiling on private land sales. Key legislative tasks included abolishing the reconstruction excess profits recovery system, revising the two major lease laws, and scrapping the roadmap for the realization of official land prices. However, most of these bills have not even progressed to discussion in the National Assembly. The special law on reconstruction remains pending, and there has been no further discussion on the proposed improvements to the two major lease laws since the research phase. Only a few policies, such as the temporary suspension of capital gains tax surcharges for multiple homeowners, easing of the comprehensive real estate tax, and adjustment of the total debt service ratio (DSR), have been implemented.