The government has decided to broadly ease the owner-occupancy requirement for "dwellings with tenants" located in land transaction permit zones, regardless of region, to open an exit for multiple-home owners. A plan is gaining traction to apply the relaxation of the owner-occupancy requirement to all dwellings with tenants within every permit zone without distinguishing between the three Gangnam districts (Gangnam, Seocho, Songpa) and Yongsan, which were previously permit zones, and the rest of Seoul's districts and parts of Gyeonggi designated later. If so, for dwellings with tenants, the grace period for owner occupancy could be extended to up to two years.
According to the Finance Ministry and the Ministry of Land, Infrastructure and Transport (MOLIT) on the 6th, the two ministries are reviewing a plan to uniformly ease the owner-occupancy requirement within permit zones. The government is considering this supplement as voices say that multiple-home owners with tenants will find it difficult to sell by May 9, the end date of the capital gains tax surcharge deferment. In permit zones, an owner-occupancy obligation is imposed, so for multiple-home owners to sell, a tenant must be able to vacate.
The previous day, Koo Yun-cheol, Deputy Prime Minister and Minister of Economy and Finance, said on social media X (formerly Twitter), "We will announce next week a supplementary plan (for the deferment of the capital gains tax surcharge for multiple-home owners) to minimize inconvenience for the public, such as for dwellings under lease."
In line with this, the Finance Ministry and MOLIT are reviewing a plan to delay the new owner's occupancy obligation. It would last until the end of the dwelling's jeonse or monthly rent contract, and considering that jeonse contracts are typically two years, the grace period is expected to be up to two years. At the same time, the Finance Ministry decided not to recognize the right to renew a jeonse contract.
A Finance Ministry official said, "For owners, there is room to view owners in Gangnam and owners newly designated (as being in permit zones) a bit differently," adding, "But not tenants. Tenants are in the same unfortunate position if the owner suddenly tells them to move out. So rather than drawing lines by permit zone, the thinking is that tenants should, as much as possible, be allowed to live out the contract period." The official added, "It is not that all dwellings will get a deferment of up to two years for the owner-occupancy start date."
For such a supplement to be possible, an exception is needed in applying the land transaction permit system. Under current permit rules, the buyer's occupancy start date is four months from the date of approval, but to defer it until the expiration of the incumbent tenant's lease, the permit system's regulations must be adjusted.
However, the Finance Ministry and MOLIT are said to differ on how far to improve the permit system's regulations. The Finance Ministry plans to swiftly roll out a supplement regarding lease contracts, where there are significant concerns about side effects. But MOLIT is reportedly conservative about the level of exceptions, citing concerns over "gap investment (sales with jeonse in place)" if exceptions are allowed in permit zones. An official with the Land Infrastructure and Transport Committee of the National Assembly said, "MOLIT is very conservative about allowing exceptions and altering the permit system," adding, "Differences in views are making consultations difficult."
The Finance Ministry and MOLIT plan to conclude consultations on this soon. A MOLIT official said, "Because this would make (the owner-occupancy obligation) an exception in permit zones, there are methodological concerns," adding, "We have not finalized matters with the Finance Ministry yet." A Finance Ministry official likewise said, "Although (consultations between the two ministries) are not finished yet, we share the intention not to let this slip past the Lunar New Year holidays."