As all of Seoul and 12 areas in the capital region have been designated as land transaction permit zones, confusion in the market is growing as different rules are applied even within the same apartment complex. Critics say the market is being distorted because, even within the same complex, requirements for actual occupancy or the loan limit vary depending on the size of the land lot or differences among district offices.
According to the government and the real estate industry on the 27th, among land traded within land transaction permit zones, if the minimum lot size does not exceed 6㎡, transactions do not require local government approval. In commercial areas, the threshold is eased further to 15㎡.
Under this standard, cases are emerging in which mixed-use apartments in commercial districts with relatively small lot sizes are avoiding the land transaction permit system. In particular, even within the same apartment complex, differences in lot size by exclusive floor area are determining whether the regulations apply.
In Gangdongraemian Palace in Gangdong District, Seoul, the unit with an exclusive area of 59㎡ has a lot size of 11.0863㎡, which does not exceed the 15㎡ threshold. By contrast, the unit with an exclusive area of 84㎡ has a lot size in the 15㎡ range, so the land transaction permit system applies and an actual-occupancy obligation is imposed. Since the system fully took effect on the 20th, listings have generally dried up, but listings for the 59㎡ units carry descriptions such as "gap investment possible" and "excluded from the land transaction permit system."
Some layouts in Yeouido Brighton in Seoul and Tower Palace in Gangnam District also fall short of the lot-size threshold and are excluded from the permit zone.
Apartment complexes that straddle two districts also saw the designation of permit zones applied differently this time. Maegyo Station Pellucid in Suwon, Gyeonggi Province, which is scheduled for move-in in August next year, was built across Paldal District and Gwonseon District. As the government designated only Paldal, Jangan and Yeongtong districts in Suwon as land transaction permit zones, the buildings located in Gwonseon District escaped regulation.
This is not the first time that differing applications of rules within the same complex have prompted criticism over regulatory fairness and home price distortions. During the 2021 home price surge, speculative demand also arose due to differences in lot sizes in permit zones. At that time, the government reduced the minimum lot-size threshold for permits from 18㎡ to 6㎡ in residential areas and from 20㎡ to 15㎡ in commercial areas.
The market notes that this could raise issues of fairness in regulation. A real estate expert said, "Since the government has imposed strong transaction controls, it will be hard to regulate even these niche transactions," adding, "Because this regulates private property, homeowners may feel the rules are not fair."
However, with permit zones drawn so broadly, some assess that investment demand for these apartment listings will not be large enough to affect the market. Ham Young-jin, head of Woori Bank Real Estate Research Lab, said, "There is some room to sidestep the rules, so it may draw interest from buyers, but because the listings that avoid regulation are small, the key will be whether there is any profit to be made from an investment perspective."