With the government designating all 25 districts of Seoul and 12 areas in Gyeonggi as land transaction permit zones (toheo-je) on the 15th, from the 20th through Dec. 31, 2026, buyers and sellers in these areas must obtain prior approval from the relevant local government when trading dwellings.
The government published the designated toheo-je areas in the official gazette that day. The measure takes effect on the 20th, five days after the notice date. The market expects the effect of eliminating demand for so-called "gap investment" (purchases leveraging jeonse). However, there are also significant concerns about side effects such as a decrease in jeonse supply.
◇ Applied from the 20th… Low-rise units at "Hannam The Hill," row houses and multiplex dwellings also subject to regulation
The target areas are all 25 districts of Seoul and 12 areas in Gyeonggi: Gwacheon, Gwangmyeong, and in Seongnam, Bundang, Sujeong, and Jungwon; in Suwon, Yeongtong, Jangan, and Paldal; in Anyang, Dongan; in Yongin, Suji; and Uiwang and Hanam.
Those requiring approval are apartments within permit zones and row houses/multiplexes in complexes that include at least one apartment building. For example, if you intend to transact after the 20th in Seongdong's Geumho-dong "Geumho Xi Phase 1," Mapo's Ahyeon-dong "Mapo The Classy," or Gwangjin's "Gwangjang Geukdong Phase 2," which were newly designated as toheo zones, you must obtain prior approval.
Previously, in the three Gangnam districts (Gangnam, Seocho, Songpa) and Yongsan, which had been designated as regulated areas and land transaction permit zones, the toheo-je applied only to apartments, but going forward, row houses and multiplex dwellings within the same apartment complexes will also require approval.
The government included row houses and multiplex dwellings within the same apartment complexes as approval targets because there were concerns that some low-rise row houses mixed into high-priced apartment complexes were falling into a regulatory blind spot. "Hannam The Hill" in Hannam-dong, Yongsan, where a single unit trades for 17.5 billion won, has 11 of its 32 buildings at four floors or lower, so these dwellings had escaped the toheo-je. At "Hannam The Hill," a 242.20-square-meter exclusive-use unit traded for 17.5 billion won last month.
Kim Gyu-cheol, Deputy Minister for housing and urban affairs at the Ministry of Land, Infrastructure and Transport, said, "When the three Gangnam districts and Yongsan were expanded as toheo zones, there was criticism that in the case of Hannam The Hill, row houses exist within the complex and transactions are conducted the same as for apartments, but because they are classified as row houses due to low-rise construction, regulatory differences arise." Kim said, "To correct this, we included row houses and multiplex dwellings within the same apartment complexes as approval targets." The ministry analyzed that roughly 700 or so households of row houses and multiplex dwellings were included in the new regulation.
Contracting parties must prepare the relevant documents. Required documents include: ▲ an approval application ▲ a land use plan ▲ a land acquisition funding plan. The competent local government will review the documents, consult, and, if necessary, conduct an on-site inspection. If approval is granted, a permit will be issued, and all remaining payment must be made within up to four months from the approval date. The government plans to provide guidance through toheo-je work guidelines in consultation with the permitting authorities (city, county, district).
◇ Demand for "gap investment" likely to be removed
If you buy dwellings in areas designated under the toheo-je, a two-year owner-occupancy requirement applies from the acquisition date. This applies to foreigners as well as citizens. Experts assess that the occupancy requirement will have the effect of blocking demand for so-called "gap investment." However, there are concerns that demand to purchase dwellings will decrease and, in turn, jeonse supply will fall. There is also a possibility that even those who want to sell and move elsewhere will be unable to find buyers, infringing on the freedom of residence transfer for residents in toheo zones.
Yoo Seon-jong, a professor of real estate at Konkuk University, said, "Right now there are various forms of speculative demand, such as gap investment in Seoul apartments by people living in the provinces, and this will disappear." Ham Young-jin, head of the Real Estate Research Lab at Woori Bank, said, "Through these real estate measures, FOMO (fear of missing out) and panic buying in Seoul's Gangnam area and the Han River belt will subside." FOMO refers to the fear of falling behind others.
◇ Concerns over a decline in jeonse supply, freedom of residence transfer likely to be constrained
There is also criticism that the supply of jeonse and monthly rental units will decline and that the freedom of residence transfer for residents in toheo zones will be restricted. Kim Jin-yu, a professor of urban transportation engineering at Kyonggi University, said, "Demand such as gap investment, excluding end-users, accounts for nearly half," adding, "As this demand disappears, the supply of jeonse units will decrease."
Kim Hak-ryeol, head of Smart Tube Real Estate Research Institute, also said, "The supply of jeonse and monthly rental units across toheo zones will plummet, raising concerns about damage to tenants," adding, "It seems the government may have made a self-defeating move."
Lee Sang-geun, a professor of real estate at the Graduate School of Sogang University, said, "Because too much money has been released into the market and liquidity has increased, I see almost no effect in restraining home price growth," adding, "Home prices should be formed by market supply and demand, and attempts to rein them in through regulation will lead to side effects."
Professor Yoo Seon-jong said, "Because such a broad area is being bound by the toheo-je, there will be infringements on the freedom of residence transfer and property rights guaranteed by the Constitution."