The Seoul city government has begun work to reduce the areas subject to the land transaction permit system. The government has formalized the reduction of the areas subject to this system by holding research projects and discussions related to the land transaction permit system.
The land transaction permit system has been a subject of controversy over property rights since the land disclosure concept was introduced in the 1970s, and the debate continues even after the Constitutional Court's ruling of 'constitutionality.' After the announcement of the 'management plan for stabilizing the housing market' by the government during the Moon Jae-in administration, the areas subject to the system expanded, focusing on the Gangnam area of Seoul and redevelopment and reconstruction areas. Currently, approximately 10% of the total area of Seoul is subject to the land transaction permit system.
The reason the Seoul city government is moving to reduce the areas subject to the land transaction permit system is due to growing controversy over the effectiveness of the system concerning areas such as Samseong-dong and Jamsil-dong in Gangnam, which have been under the land transaction permit system for five years. Many redevelopment and reconstruction sites have been designated as areas under the land transaction permit system for several years, making it difficult for homeowners in these areas to sell their dwellings, leading to increased opposition from them.
According to the research conducted, more than 60% of the respondents in a survey of officials in charge of the system indicated that the system lacks effectiveness, and some scholars concluded that there is no price stabilization effect.
According to the Seoul city government on the 20th, the previous day on the 19th, the city government revealed the results of a review and analysis study on the operation of the land transaction permit system at the Seoul Museum of History and held a discussion event titled 'Together with Citizens Seeking Efficient Operation Plans for the Land Transaction Permit System.' A city official explained, 'It has been five years since the system was fully implemented, and places that have been subject to transaction permits for a long time have accumulated. We conducted discussions and research projects to discuss methods for adjusting this with central ministries.'
The land transaction permit system was established in December 1978, following the introduction of the 'land disclosure concept' in 1970. Although there were claims of property rights violations, the system did not become a significant controversy after the Constitutional Court's 'constitutionality' decisions in 1989 and 1997, as the government and local authorities used this system only restrictively, focusing on green belts.
However, the situation changed when the government announced real estate measures in June 2020 after real estate prices skyrocketed. Areas in Gangnam, such as Samseong-dong, Cheongdam-dong, and Daechi-dong, as well as major reconstruction and redevelopment sites, were included in the land transaction permit system, expanding the target areas. As a result, it has become difficult for homeowners holding land equity to sell their dwellings, which led to an expansion of the debate regarding the system.
The International Exchange Complex District (GBC), designated as a land transaction permit area during the tenure of former Mayor Park Won-soon in June 2020, is a prominent area of controversy. It is being developed into a convention and exhibition complex (MICE) near the Jamsil Olympic Stadium and Coex in Samseong-dong, with the project expected to be completed by 2028 at the earliest. In June next year, it will mark five years since it was designated as a land transaction permit area. Under the 'Act on Reporting Real Estate Transactions' and the recommendations from the Ministry of Land, Infrastructure and Transport, the Seoul city government holds an urban planning committee meeting every year to reassess land transaction permit areas, and there is growing opinion that this extension cannot continue indefinitely. Currently, the land transaction permit area in Seoul is 65.25 square kilometers, accounting for 10.8% of the total area of Seoul (605.24 square kilometers), having increased 2.2 times from 29.49 square kilometers at the end of 2019.
The conclusion of Professors Ji Kyuhyun of Hanyang Cyber University and Lee Chang-moo of Hanyang University, who conducted research on behalf of the Seoul city government, is that 'transaction volume has sharply decreased, but there are many questions about effectiveness.'
In a survey of 53 officials in charge of the land transaction permit system in Seoul, 62.3% of the respondents indicated that 'the system does not significantly contribute to the policy objectives.' This means that six out of ten people believe that even if the land transaction permit system is enforced, it is ineffective in inducing price stabilization or transactions focused on actual demand. Professor Lee Chang-moo's study, which analyzed the system centering on the International Exchange Complex District (GBC) and reconstruction and redevelopment establishments, also concluded that there is no price stabilization effect. The professor noted, 'The expansion of designated land transaction permit areas does not necessarily stabilize the housing market prices in Seoul as a whole.'
Park Hapsu, an adjunct professor at the Korea University's Graduate School of Real Estate, stated, 'The land transaction permit system has been distorted into a means of controlling the transactions of dwellings owned by individuals with land equity, while applying a law that should only apply to pure land transactions, such as agricultural land near new towns, to urban areas.' He added, 'This has led to discussions and controversies over constitutional infringements on the freedom of transfer and property rights, as the law is being used in a manner that deviates from its original purpose and undergoes excessive administration.'