[Home Tech] What You Must Check Before Trading in Land Transaction Permit Zones

Check for Gift with Liabilities, Land Share, and Residency Obligation
Stricter Review for Gift with Liabilities
Permit Requirement Based on Land Share, Not Floor Area
Residency Must Begin Within Four Months of Permit Approval

Editor's NoteOver 70% of the assets held by Korean citizens are tied up in real estate. A home is not only our most important asset but also our closest and most comforting space. While living with our assets tied up in our homes, we provide you with the information you need to buy and sell property. The Asia Business Daily, together with Hyosun Kim, Chief Real Estate Specialist at NH Nonghyup Bank, publishes [Home Tech] every three weeks to deliver essential knowledge.

Recently, major areas in Seoul and Gyeonggi Province have been designated as Land Transaction Permission Zones (LTPZ). While the government's intention is strong to block speculative demand and establish a transaction order centered on genuine buyers, the market is currently experiencing confusion, such as a sharp decrease in listings and a freeze in transactions.

Once included in this system, transactions involving land exceeding a certain size within a permission zone require approval from the relevant local government. The buyer must also fulfill direct use obligations, such as residing in the property for at least two years according to the approved purpose. This is not merely a restriction on transactions, but a regulatory measure designed to block speculative transactions and protect genuine buyers. However, since there are confusing aspects depending on the transaction target or method, there are criteria that must be carefully checked before proceeding with any transaction within an LTPZ.

On the 27th, apartment prices in Mapo and Seongdong districts of Seoul rose at the largest rate since related statistics began to be published in 2013. It is expected that the upward trend will continue for the time being due to the anticipation that Seoul apartment prices will rise further. The photo shows a panoramic view of apartment complexes in downtown Seoul as seen from Namsan Mountain. 2025.06.27 Photo by Yoon Dongju

The Principle of Paid Contracts and No Exceptions for 'Gift with Burden'

The scope of land transaction permission is basically limited to paid contracts. In other words, pure gifts or other transactions without monetary consideration are not subject to permission. However, it is a different story when it comes to a "gift with burden," in which the recipient takes over obligations such as a pre-existing mortgage or lease deposit. In such cases, the amount of debt assumed is considered as consideration (i.e., a paid transaction) and thus requires permission. As a result, gifts with burden are subject to strict review, including the requirement for actual residence, as they can be abused as a means of circumventing the rules on gifts.

The Key to Permission Area Standards: 'Land Share'

The area standard requiring permission varies depending on the zoning of the land. In areas vulnerable to speculation, stricter standards apply, such as more than 6 square meters for residential zones. What matters here is not the total floor area of the building, but the land share (the portion of land ownership) associated with the property. Even apartments of the same size may require permission if the land share is large. In principle, officetels also require land transaction permission if the land share exceeds the standard (e.g., 20 square meters in commercial zones). However, under the new designations following the October 15 measures, the LTPZ applies only to apartments and multi-unit dwellings, including row houses. Therefore, officetels and commercial buildings can still be freely traded as before.

Obligation to Reside Must Begin Within Four Months

If members of a household, such as a couple or family, each acquire a share of the property, the total area of all acquired shares is combined to determine whether the permission threshold is met. Once permission is granted and the property is acquired, there is an obligation for actual residence for two years starting from the date of registration. To prevent postponement of this obligation through delayed final payment, actual residence must begin within four months of the permission date. This obligation to reside applies not only to the person named on the title but to the entire household.

Therefore, in the case of joint ownership by a married couple, both individuals must move into the property and actually reside there. If only one person lives there or if children reside elsewhere, this may be considered a violation. While most transactions involving apartments and multi-unit dwellings within LTPZs require prior permission, there are exceptions. These include newly allocated apartments, properties acquired through auction, and sales of reserved units by reconstruction associations. However, any secondary transaction following these cases is still subject to land transaction permission requirements.

The LTPZ system is intended to clarify the purpose of transactions and draw a clear line between speculation and genuine demand. Amid complex regulations, sound judgment is key. Since many areas are simultaneously designated as adjustment zones and speculative overheating districts, it is important to carefully review all applicable regulations, check whether you can clearly identify the source of funds under the strengthened loan standards, and then decide whether to proceed with the transaction.

Hyosun Kim, Chief Real Estate Specialist at NH Nonghyup Bank