Jinwoo Joo Proposes "Foreign Real Estate Speculation Prevention Act"
"Chinese Landlords Becoming a Reality for Korean Renters"
Three Key Points of the Amendment
Lee Administration Hints at Further Real Estate Regulations
Lee: "This Regulation Is Just a Taste of What's to Come"
Jinwoo Joo, a member of the People Power Party, explained the background of proposing the "Foreign Real Estate Speculation Prevention Act," stating, "We can no longer leave the real estate market as a playground for Chinese speculators."
On July 4, Jinwoo Joo wrote on his Facebook page, "The Lee Jae Myung administration has put the brakes on home ownership for the homeless and young people by implementing drastic real estate demand suppression policies such as reducing LTV for non-homeowners and limiting mortgage loans to 600 million won."
This is a criticism of the real estate measures announced by the Lee Jae Myung administration on June 27. The measures limit the maximum mortgage amount to 600 million won in the Seoul metropolitan area and regulated zones, and completely prohibit additional housing loans for both multiple homeowners and single-homeowners seeking to purchase additional properties. The LTV for first-time homebuyers has been lowered from 80% to 70%, and moving in within six months is now mandatory. In addition, to prevent gap investment, the guarantee ratio for jeonse (long-term deposit-based rent) has been reduced, jeonse loans have been restricted, mortgage loans for living stabilization purposes are capped at 100 million won, and the maximum loan term is set at 30 years. These are all strong regulatory measures.
The industry has expressed concerns about these measures, calling them "unprecedented, ultra-strong regulations," because they suppress demand at a time when there are already concerns about future supply.
Jinwoo Joo stated, "With real estate transaction volume plummeting, if Chinese speculative capital also flows in, it is only the Korean people who will suffer losses," adding, "The fear that Koreans may end up renting apartments bought by Chinese speculators is not unfounded."
He continued, "Last year, more than 10,000 Chinese nationals purchased real estate in Korea, and these purchases were concentrated in the metropolitan area. In China, even for residential real estate, only those who have resided in the country for more than a year are allowed to buy. This is in stark contrast to our lack of scrutiny. Is this fair?"
The "Foreign Real Estate Speculation Prevention Act" proposed by Jinwoo Joo contains three main provisions. First, purchases must be for actual residence purposes. In other words, Chinese nationals must reside in Korea for more than one year, and must move in within six months of purchasing a home.
Second, it is impossible to buy solely with loans; Chinese nationals must provide at least 50% of the purchase price in their own capital and submit supporting documents to the relevant authorities.
Lastly, the principle of reciprocity applies, and the zones and scope in which foreigners are permitted to purchase real estate will be determined by presidential decree.
President Lee Jae Myung is smiling at the press conference titled "The President's 30 Days, The Media Asks and Answers the People" held at the Blue House State Guest House on the 3rd. Photo by Yonhap News
Meanwhile, President Lee Jae Myung stated at the press conference titled "The President's 30 Days, The Media Asks and Answers the People," held at the Blue House State Guest House on July 3, that "the current loan regulations are just a taste of what's to come." Although the details have not been finalized, this is seen as a hint at further regulations.
Experts predict that additional reductions in the LTV ratio, strengthening of the Debt Service Ratio (DSR), and tougher financial regulations for multiple homeowners could be announced in succession. There is also speculation that the scope of regulations may expand to include jeonse loans and interim payment loans.
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