Seoul City is speeding up efforts to expand the supply of private rental housing. This is a response to growing instability in the real estate market following the government's demand-suppression measures, including designating the entire city as a land transaction permit zone.
Oh Se-hoon, the Seoul mayor, visited the private rental housing complex "Mango Grove Sinchon" in Mapo District on the morning of the 8th and said, "To revitalize the non-apartment market, which is the living space for one- to two-person households, young people, and newlyweds, we will strongly and repeatedly call on the government to ease regulations on private rental business operators." Mango Grove is a corporate-type private rental business operator that runs four branches in Seoul. The Sinchon branch currently has 277 residents in 165 rooms.
Earlier, in the Sept. 7 package, the government limited the loan-to-value (LTV) ratio for collateral rental stabilization for purchase-type rental business operators to 0%. Buying new rental housing now requires 100% cash. In addition, the Oct. 15 package designated the entire city of Seoul as a regulated area and excluded purchase-type rentals from deductions for the comprehensive real estate tax, undermining the profitability of rental businesses.
Oh said that tightening regulations on private rental business operators has led to a reduction in the supply of private rental housing with high residential stability, heightening housing insecurity for ordinary monthly and jeonse renters and causing serious side effects by reducing the supply of non-apartments.
According to the Seoul Metropolitan Government, private rental housing has contributed to stabilizing the monthly rent and jeonse market by allowing residents to live stably without the risk of jeonse fraud through measures such as long-term leases of six to 10 years, a 5% cap on monthly and jeonse rent increases, and mandatory subscription to deposit insurance. In particular, 80% of private rental housing consists of non-apartment types such as officetels, multi-unit houses, and urban lifestyle housing, serving as major living spaces for one- to two-person households, low-income residents, young people, and newlyweds. The 2024 housing conditions survey shows that among young renter households, the share living in non-apartments is high at 82.8%. There are currently 416,000 registered private rental homes in Seoul, accounting for 20% of all rental housing.
With the goal of directing quality investment into non-apartment housing and reviving the collapsed private rental market, the city plans to fully push the "Plan to revitalize registered private rental housing in Seoul," released in October last year.
The city proposed to the government a reasonable adjustment of tax benefits, including easing the LTV to 70%, which is the biggest hurdle for private rental business operators entering the market, and reapplying the exemption from aggregation for the comprehensive real estate tax. Separately, the city completed revisions to the Seoul local government ordinance to improve the building environment for officetels.