The government is preparing a plan to further expand the scope of deferrals for owner-occupancy requirements for dwellings within land transaction permit zones (the land transaction permit system) as a follow-up to the 2026 tax reform plan. It aims to draw out listings by increasing the tax burden on owners of ultra-high-priced or non-residential dwellings, while opening an exit for landlords who find it hard to sell because tenants live in the home. Some also say that, since this would be the third adjustment this year to exceptions to owner-occupancy under the land transaction permit system, the policy lacks consistency and predictability.
According to the government and the real estate industry on the 9th, the Ministry of Economy and Finance and the Ministry of Land, Infrastructure and Transport are reviewing a plan to expand the eligible targets and period for deferring owner-occupancy requirements within land transaction permit zones. If the real estate tax code is revised as the government proposes, the tax burden on owners of ultra-high-priced or non-residential dwellings will grow, but homes occupied by tenants may be hard to sell because it is difficult to find a buyer who will move in, critics noted.
Vice Minister Lee Hyeong-il of the Ministry of Economy and Finance said on the presidential office's YouTube program "Fact Mill" on the 6th, "Some say they tried to sell due to the holding tax burden but it is hard to find an owner-occupant because they are bound by the land transaction permit system, and it is hard to sell because a tenant lives there," adding, "We are preparing a plan to additionally expand deferrals of the owner-occupancy requirement." A Ministry of Land, Infrastructure and Transport (MOLIT) official also said, "We will disclose the specifics as soon as they are finalized."
To buy a dwelling in a land transaction permit zone, a buyer must obtain approval from the head of the relevant city, county or district. Typically, the buyer must move in within four months after approval and reside there directly for two years from the acquisition date. When the government designated major apartment complexes in Seoul's Gangnam and Songpa in 2020 as land transaction permit zones, the two-year owner-occupancy requirement began to apply in earnest to apartment transactions as well. The aim was to block so-called gap investment, in which buyers purchase a home while leaving a jeonse tenant in place.
◇ Possibility of extending the year-end deadline for permit applications
Under the current system, if a person without a home buys a dwelling that, as of May 12, had a tenant in residence or a registered jeonse right, the move-in can be postponed until the existing lease expires.
To receive the deferral, the buyer must remain without a home from May 12 until acquiring the dwelling. The buyer must apply for a land transaction permit by Dec. 31 this year and complete acquisition and registration within four months from the permit date. The move-in deferral lasts until the first expiration date of the then-current lease, and the buyer must move in by May 11, 2028, at the latest. The obligation to reside directly for two years thereafter remains in place.
Inside and outside the government, there is talk of first extending the deadline for land transaction permit applications set for the end of this year. It has not been decided whether to push back the final move-in deadline set for May 2028.
The government has expanded exceptions to the owner-occupancy requirement under the land transaction permit system twice this year. In February, ahead of the end of the temporary easing of the heavy capital gains tax on multiple-home owners, it allowed a person without a home to delay moving in when purchasing a dwelling being rented out by a multiple-home owner. As debate over fairness between multiple-home owners and non-resident single-home owners grew, in May the scope of deferrals was broadened to all dwellings with tenants regardless of the seller's number of dwellings.
◇ Even if listings increase, the effect on transactions is uncertain
If deferrals of the owner-occupancy requirement are expanded, homes with tenants could also be sold, potentially increasing the supply of listings of existing dwellings. While tightening the holding tax to encourage sales, it could also reduce policy conflict in which the land transaction permit system blocks transactions.
However, some analysis suggests the actual increase in transactions could be limited. Yoo Seon-jong, a professor in the Department of Real Estate at Konkuk University, said, "It is meaningful in terms of revitalizing transactions, but we have to see how much the volume actually increases."
Debate over policy consistency is also expected. While the government emphasizes blocking gap investment and a transaction order centered on owner occupancy, repeatedly expanding exceptions depending on market conditions could undermine the predictability of the system.
A multiple-home owner who sold a dwelling this year, identified as A, said, "I paid moving expenses and a departure settlement to have the tenant move out and then sold the home," adding, "If the owner-occupancy deferral policy keeps changing, it is hard to trust government announcements and plan sales and leases."