Oh Sehun Takes Action on 'Foreign High-Priced Home Purchases'... Orders Review of Overseas Regulations

Order to Review Applicability of Overseas Regulations
City Proposes Amendments to Real Estate Transaction Reporting Act
Initiation of Survey on Foreign Ownership of Real Estate

The Seoul Metropolitan Government has begun a preliminary review to establish regulations and strengthen oversight regarding the purchase of high-priced homes by non-resident foreigners.

On August 11, Seoul Mayor Oh Sehun held an executive meeting and instructed relevant departments to examine the regulatory approaches and supervisory functions of major countries such as the United States, Australia, Singapore, and Canada in regard to non-resident foreigners purchasing homes, and to assess whether these could be applied in Seoul.

Seoul Mayor Oh Sehun. Photo by Jo Yongjun

Mayor Oh stated, "Now that the issues surrounding foreign purchases of high-priced homes have come to the surface, it is time for practical measures to be introduced. Establish clear principles in consultation with the Ministry of Land, Infrastructure and Transport to ensure that domestic residents are no longer adversely affected."

This move stems from the view that high-priced home purchases by non-resident foreigners could distort the market and result in reverse discrimination against domestic residents. Currently, domestic residents are subject to the 6.27 loan regulation, which limits their mortgage loans to 600 million won or less, but foreigners who secure loans overseas can circumvent these restrictions when purchasing homes.

Previously, in June, Mayor Oh also instructed the preparation of measures to prevent foreign real estate purchases from disrupting the real estate market. He further ordered that the Ministry of Land, Infrastructure and Transport be promptly advised to develop countermeasures related to foreign land and housing purchases.

The city has proposed to the Ministry of Land, Infrastructure and Transport the introduction of a 'reciprocity' system to restrict foreign real estate acquisitions, as well as amendments to the Enforcement Decree of the Real Estate Transaction Reporting Act. Since last month, the city has been collaborating with the Seoul Institute to conduct a study analyzing the status of foreign real estate ownership by nationality, age, and region.

On-site inspections have also been strengthened. Joint inspections with district offices have been conducted for 99 cases of foreign acquisitions within land transaction permit zones, and investigations have been completed for 73 cases so far. Among these, three cases (one residential, two commercial) were found to have violated the stated purpose of the permit, and orders for corrective action have been issued.

Going forward, the city plans to review restrictions on home acquisitions by non-resident foreigners, as well as pre-approval and permit systems based on reciprocity, drawing on analyses of overseas cases. The direction for implementing these systems will be determined in consultation with the Ministry of Land, Infrastructure and Transport.

Meanwhile, the National Tax Service has launched a special tax investigation into 49 foreigners who acquired high-priced apartments through expedient means in Seoul's three Gangnam districts and Yongsan District. According to the National Tax Service, the majority of these individuals are nationals of the United States and China, with 40% being of Korean descent. Some of the homes purchased by these individuals are apartments valued at over 10 billion won.