The government is considering regulatory measures on speculative ownership of a single dwelling without actual residence. After President Lee Jae-myung said, "We will create a situation where those who own a single dwelling for investment or speculation, not for residence, find it more advantageous to sell than to hold," authorities are also reviewing measures to regulate dwellings bought through gap investing (purchases with a jeonse tenant in place). Following multi-home owners, people who own a single dwelling for investment may also be subject to loan restrictions. Targeted tax measures are also expected, depending on the number of dwellings owned, dwelling prices, and residency status. However, the lack of clear criteria for determining how far to classify non-resident single-dwelling owners as speculators could lead to confusion on the ground.
According to the government on the 4th, real estate-related ministries and agencies, including the Ministry of Land, Infrastructure and Transport, the Ministry of Economy and Finance, and the Financial Services Commission, are reviewing regulatory measures for speculative single-dwelling owners. A government official said, "Relevant ministries are holding informal meetings on measures related to single-dwelling owners for investment or speculation."
On the 26th, the president said on X, "By mobilizing all policy tools, we will create a situation where not only multi-home owners but also single-dwelling owners for investment or speculation, not for residence, find it more advantageous to sell than to hold," adding, "Ultra-high-priced dwellings will face burdens and regulations commensurate with those in the capitals of advanced countries." The president said, "Various regulations and burdens will be based on a single dwelling for actual residence, but we will apply fine-tuned weights depending on residency status, number of dwellings, dwelling price levels, and regional characteristics," emphasizing, "We will actively protect ordinary housing but strictly block investment and speculation using dwellings."
The government plans to deploy tools in four areas: ▲ finance ▲ taxation ▲ regulation ▲ supply. A senior government official said, "We believe there are tools to stabilize home prices in terms of finance, taxation, regulation, and supply," adding, "The ministries related to these areas are determining the details through consultations. No measures have been decided yet."
The market expects that, in line with the president's directive, regulations will target non-resident owners of high-priced single dwellings, known as gap investors. The most likely measure is loan regulation. Currently, the financial authorities are reviewing a plan to restrict loans if an owner leases out their own dwelling while renting another home to live in, when deemed to have a speculative nature. Jeonse loans for single-dwelling owners are already capped at up to 200 million won, and measures to tighten this cap and expand application of the debt service ratio (DSR) to jeonse loans are expected. For non-resident single-dwelling owners with a speculative nature, similar to multi-home owners, there is also a possibility that stricter regulations will apply at loan renewal as if they were new loan screenings.
On the tax side, even single-dwelling owners could face higher property tax burdens if they do not actually reside in the dwelling. In this case, the level of tax burden would likely be determined by conditions such as the number of dwellings owned and their prices. Some scholars are discussing a plan to overhaul capital gains tax benefits for single-dwelling owners based on conditions such as long-term residence, life-cycle stages, and limits on capital gains and the number of transfers. Other scholars are proposing to raise the non-taxable threshold for capital gains on single dwellings.
Although there is talk of further raising the assessed-value realization rate from this year's 69% for multi-unit dwellings, it appears unlikely that short-term measures will emerge, as the Ministry of Land, Infrastructure and Transport (MOLIT) is currently conducting a research project on the issue.
However, some point out that it is difficult to single out speculative behavior in the case of single-dwelling owners. There are no criteria for reasons one cannot actually reside in a dwelling or for determining what counts as a high-priced dwelling. Seo Jin-hyung, a professor in the real estate law and administration department at Kwangwoon University, said, "If regulations on non-resident single dwellings are strengthened, heightened property tax rates and tougher capital gains taxes are expected from the tax side," adding, "Rather than determining whether there is speculation, regulations could move toward being strengthened if one is a non-resident single-dwelling owner."