Seoul City Launches Efforts to Revitalize Private Rental Market... Seeking a Breakthrough to Overcome the "Supply Shortage"

Mayor Oh Listens to Rental Business Operators
Emphasizes Easing Regulations on Private Rentals
Proposes Easing LTV and Excluding from Comprehensive Real Estate Tax

Seoul City is moving to revitalize the private rental housing market as a breakthrough to overcome the supply shortage. Amid a decline in jeonse listings and worsening housing difficulties following the October 15 measures, the city has called for solutions to lower the entry barriers to the private rental housing market.

On January 8, Seoul Mayor Oh Se-hoon visited "Mangrove Sinchon," a private rental housing complex located in Mapo-gu, to listen to the opinions of residents and private rental business operators. Mangrove Sinchon, completed in 2023, is a private rental housing complex with 165 units, currently home to 277 residents.

Seoul Mayor Oh Se-hoon is announcing the "Plan to Revitalize Registered Private Rental Housing" on October 1 last year. Provided by Seoul City

At the site, Mayor Oh stressed the need to ease regulations on private rental business operators. He stated, "Tightening regulations on private rental business operators leads to a decrease in the supply of private rental housing, which offers high residential stability. This, in turn, increases housing insecurity for ordinary citizens and causes a serious side effect of reducing the supply of non-apartment housing. I will strongly reiterate to the government the need to ease regulations on private rental business operators."

Private rental housing is subject to an annual rent increase cap of 5%, mandatory contract renewal for rental periods of 6 to 10 years, and a requirement to purchase guarantee insurance. Due to the low risk of jeonse fraud, these properties have served as a stable housing option for tenants. Currently, there are 416,000 registered private rental housing units in the city, accounting for about 20% of all rental housing. Among these, non-apartment types such as officetels, multi-family housing, and urban lifestyle housing, which are popular among single-person households and newlyweds, make up 80% of the total.

The private rental housing market is facing difficulties due to the government's stringent lending regulations and the impact of the October 15 measures. Since the September 7 supply measures, the loan-to-value (LTV) ratio for acquisition-type rental business operators has been limited to 0%, effectively blocking new entrants from the market. To purchase new rental housing, business operators must now prepare the entire purchase price in cash. Furthermore, acquisition-type rental housing is no longer excluded from the comprehensive real estate tax calculation, which is expected to increase the tax burden on rental business operators.

The city believes it is necessary to attract private rental business operators to the market to increase the supply of non-apartment housing. Since gap investment was restricted after the October 15 measures, the number of jeonse listings in Seoul as of November last year (25,000 cases) decreased by 25% compared to the previous year. The number of new apartment units scheduled for occupancy next year is also only 29,000, making it urgent to find a breakthrough to resolve the supply shortage.

In response, the city announced the "Plan to Revitalize Registered Private Rental Housing in Seoul" last October, promising financial support, relaxation of building regulations, and administrative support for both landlords and tenants.

The city has requested the government to rationally adjust tax benefits, including easing the LTV for private rental business operators and improving the exclusion of rental housing from the comprehensive real estate tax calculation.