While the Democratic Party of Korea is pushing an amendment to expand the designating authority so that the Minister of Land, Infrastructure and Transport can also hold the power to designate "land transaction permission zones (LTP zones)," which is currently vested in local government heads, it has been found that under the current law the Minister can already designate LTP zones. This means the government can impose strong real estate restrictions by using the LTP tool without going through a legal amendment process that takes more than two months.
The current law allows designation under the LTP system by the land minister if the condition of "a zone spanning two or more city/provincial jurisdictions" is met. The government and the ruling party say they will amend the law so the Minister can designate individual autonomous districts in Seoul as LTP zones even without such a condition.
However, some experts interpret that even without amending the law, by using the condition of "a zone spanning two or more city/provincial jurisdictions," areas along the Han River belt—such as Mapo, Seongdong, and Gwangjin—where home prices have recently surged and which the government views as key regulated zones, as well as Bundang and Gwacheon in Gyeonggi, can be designated as LTP zones. The method is to place the entire city of Seoul under the LTP system. If this is done, the condition is naturally satisfied, allowing the government to control transactions in areas with soaring home prices. It could also block the so-called balloon effect from spreading to Seoul's outer districts such as Nowon, Dobong, Gangbuk, Geumcheon, Gwanak, and Guro.
That said, some experts also raise concerns that this approach excessively restricts freedom of residence transfer (Article 14) guaranteed by the Constitution.
According to Article 10, Designation of land transaction permission zones, of the Act on Report on Real Estate Transactions, etc., on the 14th, it is stipulated that "if a permission zone spans two or more city/provincial jurisdictions, the Minister of Land, Infrastructure and Transport may designate it."
For example, if the entire city of Seoul is broadly designated as an LTP zone while Bundang and Gwacheon are designated as well, it could be implemented under the authority of the Minister of Land, Infrastructure and Transport based on the current law.
Yoo Seon-jong, a professor in the Department of Real Estate at Konkuk University, said, "If an LTP zone is designated across two cities/provinces, it can be done under the authority of the Ministry of Land, Infrastructure and Transport." To satisfy the meaning of "across two cities/provinces" cited here, the entire city of Seoul would have to be made an LTP area. In the current situation, it is not easy for the ministry to make pinpoint designations of places like Mapo and Seongdong in Seoul and Bundang and Gwacheon in Gyeonggi, which are far from Gwangjin-gu.
Yoo said, "However, a broad LTP designation could lead to excessive price increases when lifted later and could infringe on basic rights of the public due to restrictions on residence, so caution is needed."
The Seoul Metropolitan Government, which currently holds the authority to designate LTP zones within Seoul, is also aware of this. A Seoul city official said, "If two cities/provinces are geographically involved, I understand that the Minister of Land, Infrastructure and Transport can designate an LTP zone."
Meanwhile, when unveiling the Sept. 7 housing supply measures, the Ministry of Land, Infrastructure and Transport mentioned expanding the Minister's authority to designate LTP zones, and afterward the ruling party introduced an amendment. Lawmaker Cheon Joon-ho of the Democratic Party of Korea and others proposed a partial amendment to the Act on Report on Real Estate Transactions, etc. The market expected that it would take as little as about two months for the bill to pass. The bill would allow the land minister to make pinpoint LTP designations of only certain autonomous districts without placing the entire city of Seoul under the LTP system.
Until 2015, designation of LTP zones was the exclusive authority of the land minister. However, after the law was revised to the current version, the designating authority was changed to local government heads. In the 2000s, under the Roh Moo-hyun and Lee Myung-bak administrations, the Minister of Land, Infrastructure and Transport frequently designated or lifted LTP zones across Seoul and Gyeonggi. Around 2008–2009, areas such as the Gireum and Wangsimni New Towns, Songdo, Cheongna, and Gwanggyo New Town were redesignated as LTP zones, and some were later lifted.