"Sell the House and Stay Put"... Jujeonse 'Gap Investment' Fuels a Booming Market [Real Estate AtoZ]

Transactions Without Real Demand Fuel Market Overheating
Jujeonse Circumvents Gap Investment Restrictions, Generation-Skipping Gifts Reduce Taxes and Lock Up Listings
Liquidity Gains and Tax Savings Mask Underlying Market Instability
Expert: "Both Jujeonse and Generation-Skipping Gifts Are Driving Market Overheating"

Recently, there have been growing concerns in the real estate market about transaction structures where actual transactions take place but there is no real move-in, creating an illusion of an overheated market. The most notable examples are "Jujeonse" and "generation-skipping gifts." In both cases, transactions are recorded, but they are either unrelated to genuine move-in demand or result in properties disappearing from the market. Analysts point out that these practices are simultaneously driving up real estate prices and fueling a speculative market.

Yonhap News Agency

"Jujeonse" refers to a transaction where the homeowner sells their property and immediately becomes a jeonse (long-term lease) tenant in the same home. For instance, in an apartment where the sale price is 1.5 billion won and the jeonse deposit is 800 million won, the buyer can purchase the property for just 700 million won without actually moving in. The seller receives 800 million won as a deposit and continues to reside in the property. In this arrangement, the buyer achieves a gap investment, while the seller secures liquidity.

This structure has reportedly surged again following the June 27, 2025, lending regulations. At that time, the government blocked "conditional jeonse loans for ownership transfer," putting the brakes on gap investments. However, since jujeonse does not involve the use of jeonse loans, it is being used as a way to circumvent regulations.

The problem is that while these transactions are included in official transaction reports, they are not based on genuine demand. This leads to "statistical distortion," where transaction volumes appear to rise and prices seem higher, even though there is no actual demand. Furthermore, in the case of jujeonse, the jeonse deposit is often set at a high level, increasing the risk of deposit return issues at the end of the lease period.

Meanwhile, in the high-end housing markets of the three Gangnam districts and Yongsan District-areas subject to government regulations-generation-skipping gifts are reportedly becoming more widespread. This method involves grandparents gifting property directly to their grandchildren, bypassing their children. The gift tax is paid only once, but an additional penalty tax is imposed (30% for adults, 40% for minors).

For example, if a parent directly gifts an apartment worth 2 billion won to their son, after a basic deduction of 50 million won, a gift tax of approximately 781.82 million won and an acquisition tax of 80 million won are incurred, totaling 861.82 million won in taxes. In contrast, if the same asset is gifted from a grandparent to a grandchild via the parent, the combined gift and acquisition taxes amount to 1.3628 billion won. As a result, more than 500 million won (about 37%) in taxes can be saved.

According to the Supreme Court’s Registry Information Plaza, from January to September 2025, there were a total of 1,264 apartment gifts in the three Gangnam districts (Gangnam, Seocho, Songpa), a 31.3% increase from 963 cases during the same period last year. While asset succession through gifts is on the rise, properties are disappearing from the market. According to the real estate big data platform Asil, as of October 2, 2025, the number of apartment listings in Seoul decreased by 8.7% year-on-year (from 83,342 to 76,129 units).

Yoon Sumin, a real estate expert at NH Nonghyup Bank, commented, "Generation-skipping gifts not only reduce taxes but also contribute to the locking up of listings, while jujeonse artificially boosts reported prices and transaction volumes without real demand. Both methods are among the factors fueling market overheating."