Submitted to the Ministry of Land, Economy, and Interior
"Greater Supply Will Help Stabilize the Rental Market"
The Korea REITs Association announced on December 3 that, together with 10 construction and housing rental-related organizations, it had submitted a joint proposal to the government requesting the easing of regulations on the purchase-type rental housing business.
The associations argue that, despite rising demand for rental housing due to an aging population and an increase in single-person households, excessive tax and loan regulations are imposed only on purchase-type rentals, which involve buying existing homes to rent out.
The proposal was jointly submitted by seven associations under the Ministry of Land, Infrastructure and Transport (including the REITs Association, Korea Construction Association, Korea Housing Association, Korea Housing Builders Association, Korea Developer Association, Korea Association of Realtors, and Korea Housing Managers Association) and four industry associations (Korea Housing Management Association, Korea Real Estate Marketing Association, Korea Housing Rental Management Association, and Korea Building Association), uniting their voices on the issue.
The proposal was submitted to the Ministry of Land, Infrastructure and Transport, the Ministry of Economy and Finance, and the Ministry of the Interior and Safety.
Loosening Tax and Loan Restrictions Needed to Revitalize Apartment Rentals
Property listings are posted in front of a real estate agency near a university area in Seoul. Photo by Yonhap News
The main demands outlined in the proposal include: ▲ exclusion from the 12% acquisition tax surcharge and improvements to the comprehensive transfer tax exemption system ▲ allowing the registration of apartments as purchase-type rentals ▲ easing the ban on loan-to-value (LTV) mortgage loans for purchase-type rentals in regulated areas ▲ maintaining the exclusion of purchase-type rentals from comprehensive real estate tax calculations in regulated areas ▲ extending the application period for special measures in areas with declining populations.
The associations pointed out, "Excessive regulations are reducing the supply of purchase-type rentals and driving up rental prices, ultimately undermining housing stability for the public."
Industry representatives criticized that both the acquisition tax surcharge and the comprehensive real estate tax burden are barriers to both entering and maintaining a purchase-type rental business. They argue that imposing a 12% acquisition tax when buying a home, and ending the comprehensive real estate tax exclusion in regulated areas, makes it difficult for business operators to continue. They believe that reducing the tax burden is essential for increasing the supply of purchase-type rental housing.
Apartment and loan regulations were also highlighted as issues. Current law does not recognize apartments as eligible for purchase-type rental registration. Since most tenants prefer apartments, blocking purchase-type rentals for apartments reduces available options. The complete ban on mortgage loans for purchase-type rentals in regulated areas was also cited as a factor hindering business sustainability.
The special measures temporarily allowed in regions with declining populations were also deemed ineffective, as there is little actual business activity or tenant demand in these areas. The industry argues that the application period, currently limited to the end of next year, should be extended, and that additional measures such as maintaining the comprehensive real estate tax exclusion should be implemented.
"Easing Regulations Will Revitalize Rental Housing Supply"
The associations believe that if their proposal is accepted, it will revitalize the supply of rental housing and help stabilize the rental market.
The associations stated, "Excessive regulations on purchase-type rental housing operators are inconsistent with the government's policy of stabilizing housing supply," and added, "Easing tax and financial regulations on purchase-type rental housing will increase the supply of construction-type rental housing and contribute to greater housing stability for the public."
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