The Presidential Takeover Committee is reviewing the exclusion of the total number of houses for small-area villas and multi-family houses, which are the types of housing for the common people, in order to secure a stable amount of cheonsei. Residential officetels are also discussing ways to deduct small-sized areas from the number of houses owned.
This is after President-elect Yoon Seok-yeol made a surprise appearance in the report of the transition committee of the Ministry of Land, Infrastructure and Transport on the 25th, implying easing of regulations on multi-family dwellings. Excluding some houses from the number of owned houses will reduce the tax burden on multi-family dwellers. This may open up the supply of rental housing, but there is also a concern that the so-called ‘gap investment’ will increase again. According to an official of the transition committee on the 30th, the requirements for excluding the total real estate tax for purchased rental housing are based on the amount (600 million won at the time of registration of the rental house, 300 million won outside the metropolitan area) and the rental period (10 years after August 18, 2020) do. However, as new house prices soared in the past few years, the number of houses that meet these requirements has decreased, and as the benefits to rental housing operators have almost disappeared, the private rental housing supply has rather decreased, and rents such as deposits and monthly rent have been passed on to tenants. situation. However, residential officetels are excluded from the aggregation exclusion.
Accordingly, the transition committee is said to be considering a plan to include not only villas and multi-family houses, but also residential officetels, which are currently excluded from the aggregation exclusion requirement, from the number of houses when tax is imposed, but include an area standard and adjust the amount standard. Currently, officetels can be exempted from heavy tax by deducting them from the number of houses when paying transfer tax, etc., only if they are used for office purposes. An official from the transition committee said, “We are reviewing a plan to allow multi-family dwellers to supply up to 84 square meters of exclusive use for officetels with a low occupancy rate and 59 square meters or less for other multi-family or villas as rental housing for a stable price for a long period of time.”
[단독] “Real estate market regulation will be restored to the state before the Moon administration”
Real Estate TF start up
Appointed 9 private real estate experts
Discussion on loan regulation relaxation and rental stability
Trim from fair market value ratio
Possible by enforcement decree without amendment of the law
New Stay rental revival notice
Review of improvement with sales after 20 years
Complementation of the division system and the redemption of excess profits
The key keyword of the activities of the Real Estate Task Force (TF) under the Presidential Takeover Committee was ‘Real estate regulation, restoration to the former Moon Jae-in government’. The Real Estate TF of the Acquisition Committee held its first meeting on the 30th under this principle and started its activities. An official from the transition committee said, “Basically, there are too many regulations under the current government, and as a result, rather than stabilizing house prices, there is a consensus that prices have risen and it has become more difficult for the common people to find their own houses.” “The goal is to reduce the tax burden to the state it was before the house price surge,” he said.
During a briefing on the first meeting of the Real Estate TF, Deputy Spokesperson Won Il-hee of the transition committee said, “The real estate TF will be divided into financial taxation and supply and housing welfare divisions.” It has to be market-friendly and have a sense of presence, because I think there is an answer in the field.”
The Financial Tax Division discusses alleviating excessive tax burden related to real estate, rationalizing loan regulations, and stabilizing the rental market. The direction in the field of rationalization of loan regulation has already been revealed. This is because President-elect Yoon Seok-yeol proposed a proposal to ease the mortgage loan ratio (LTV) by up to 80% during his candidacy. However, opinions differ on the total debt-to-income ratio (DSR). There are opinions that even the DSR should be eased, while others are of the opinion that the LTV should be eased but the DSR should be left as it is in consideration of the current rising base interest rate and the need to manage household debt.
In order to alleviate the excessive tax burden, the acquisition committee is likely to demand an adjustment to the fair market value ratio. This is a measure that can put out the ‘urgent fire’ as it can only be adjusted by the enforcement ordinance without amendment of the law. The fair market value ratio is the ratio multiplied by the published price when determining the tax base. Assuming that the published price of a house is 1 billion won and the fair market value ratio is 60%, 600 million won is the tax base. As for this ratio, 60% of property tax and 100% of property tax are applied, and the transition committee is expected to decide how much to adjust this ratio.
The plan of the transition committee is to secure rental properties that can appear on the market as long and stable as possible through activation of rental housing business registration, and to provide tax benefits to those who provide these properties. The day before, on the 29th, TF team leader Shim Gyo-eon announced the activation of the private rental housing business operator system. In general, when people called ‘multi-homeowners’ put out their houses for sale, register as a rental housing business, limit the upper limit of rent, and promise to provide them for a long period of time, they can provide housing for small villas, multi-family houses, and officetels. The most representative example is to exclude the summation of numbers. In the current structure where the tax burden rises exponentially as the number of houses increases, the exclusion of the sum of the number of houses is a fairly large ‘carrot’. The acquisition committee’s calculation is that if the transfer tax is included in this, the market will have an incentive to stably supply rental housing on its own.
At a time when the revival of the so-called ‘New Stay’, the corporate rental housing introduced during the Park Geun-hye administration, is expected to be reintroduced, it is interesting to see how it will be reintroduced. Although a ‘quantity offensive’ is possible in that it is a rental housing that companies provide on a large scale, some critics have criticized that only large construction companies are satisfied in the past structure of renting for only 8 years and then selling them. In key areas such as Seoul, it was difficult to secure paper itself. For this reason, it is said that a sophisticated design is needed to revive it. Inside the transition committee, there is talk of whether New Stay’s ‘rules’, which were sold after 8 years of lease, should be sold after 20 years of lease like Oh Se-hoon’s ‘Shift (long-term jeonse house)’. It is interpreted that this came out of a concern to secure a long-term stable ‘brand rental housing’ while avoiding the controversy of ‘large corporations’.
Supply measures will also be implemented in line with President-elect Yoon’s promises. President-elect Yoon promised to supply 2.5 million households during his term, but the focus is on the development of public housing sites and the easing of regulations on reconstruction and redevelopment. The reason is that the development of public housing sites is possible under the government’s initiative and requires a large amount (1.42 million households), and reconstruction and redevelopment are possible with the will of the government. The transition committee plans to review proposals such as △ rationalization of safety inspection regulations, △ rapid integration of licensing, △ supplementing the sale price ceiling system, and △ revision of the excess profit recovery system for reconstruction.
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