Ruling Party "Push for Lease 3 Laws" vs Opposition "Easing Comprehensive Real Estate Tax"... Legislative Battle Begins

[Asia Economy Reporter Moon Jiwon] 'Speculation Prevention' vs 'Regulation Relaxation'

Just one week after the opening of the 21st National Assembly, the ruling and opposition parties are engaging in a full-scale legislative battle over real estate. The ruling Democratic Party of Korea has been consecutively proposing bills related to speculation prevention and tenant protection, while the opposition United Future Party is focusing on easing regulations such as reducing the comprehensive real estate tax and scaling back the price ceiling system for pre-sale apartments.

According to the National Assembly and real estate industry on the 8th, fierce debates over the comprehensive real estate tax (종부세) are expected from the early days of the 21st National Assembly. In the United Future Party, first-term lawmakers from the Gangnam area, Bae Hyun-jin (Seoul Songpa-eul) and Tae Young-ho (Seoul Gangnam-gap), both proposed amendments to the Comprehensive Real Estate Tax Act last week, bringing the issue to the forefront.

Lawmakers Bae Hyun-jin and Tae Young-ho Propose 'Comprehensive Real Estate Tax Easing' Amendments

The core of Bae's amendment is to raise the current tax payment threshold for housing from 600 million KRW to 900 million KRW. For single homeowners, the threshold is adjusted from 900 million KRW to 1.2 billion KRW. Since the official housing prices have risen significantly since the Moon Jae-in administration began, increasing the tax base aims to reduce the number of taxpayers burdened by the comprehensive real estate tax.

Tae's amendment excludes single homeowners from the comprehensive real estate tax payment obligation regardless of housing price. Tae explained in the amendment, "For taxpayers, the house they actually reside in is only an unrealized gain unless they dispose of it. Such houses should not be included in the comprehensive real estate tax base as they do not cause real estate price instability."

However, the government and ruling party still maintain that the comprehensive real estate tax should be strengthened to stabilize housing prices, so a fierce confrontation is expected. Former Democratic Party lawmaker Kim Jung-woo, when serving as the Democratic Party whip of the Planning and Finance Committee in the 20th National Assembly, proposed an amendment to the Comprehensive Real Estate Tax Act that raised tax rates by 0.1 to 0.8 percentage points to increase the tax burden.

The government and ruling party are reportedly planning to propose a similar amendment to the Comprehensive Real Estate Tax Act this time as well.

During the last general election, Democratic Party's leading presidential candidate Lee Nak-yeon repeatedly mentioned reducing the comprehensive real estate tax burden for single homeowners, so some details may be adjusted, but since the government’s policy is firm, the overall framework is unlikely to change.

On the 5th, when the first plenary session of the 21st National Assembly was held, members of the United Future Party were leaving the National Assembly plenary hall after Floor Leader Joo Ho-young finished his procedural speech. (Photo by Yonhap News)

Ruling and Opposition Clash Over Private Land Price Ceiling System

The ruling and opposition parties are also expected to clash over the government's real estate regulations such as the price ceiling system for pre-sale apartments. United Future Party lawmaker Lee Heon-seung proposed an amendment to the Housing Act that prohibits applying the price ceiling system to private land. This amendment deletes the legal basis for the private land price ceiling system scheduled to be implemented by the government from the end of July.

However, the government and ruling party plan to further strengthen the price ceiling system. The Ministry of Land, Infrastructure and Transport extended the resale restriction period for apartments subject to the private land price ceiling system from a maximum of 4 years to up to 10 years last October, and recently announced plans to reintroduce a mandatory residence period of up to 5 years.

This is an intention to eradicate real estate speculation by expanding the mandatory residence period, currently applied only to public apartments in the metropolitan area, to private land apartments.

During the last National Assembly, a Housing Act amendment proposed by Democratic Party lawmaker Ahn Ho-young containing such provisions was scrapped due to opposition from the opposition party, but this time, with the Democratic Party holding 177 seats, it is highly likely to be prioritized along with the rent ceiling system and increased comprehensive real estate tax rates.

Bill Proposed for Rent Ceiling System... Accelerating the 'Three Lease Laws'

Democratic Party lawmaker Yoon Hu-duk proposed an amendment to the Housing Lease Protection Act that introduces the contract renewal request right and rent ceiling system.

The core is to allow tenants to exercise the contract renewal request right once (2 years + 2 years) and cap rent increases at 5%.

Lawmaker Ahn Ho-young is also expected to soon propose an amendment to the Housing Act to introduce the rent reporting system. The rent reporting system requires actual transaction prices of rental contracts to be reported within 30 days, similar to housing sales.

This system serves as a foundation for operating the contract renewal request right and rent ceiling system.

In the previous National Assembly, the so-called 'Three Lease Laws'?the rent reporting system, rent ceiling system, and contract renewal request right?did not achieve results. The government and ruling party are rushing legislative work to pass these bills quickly in this National Assembly.

Additionally, Democratic Party lawmaker Yoon Kwan-seok has proposed an amendment to the Housing Act that allows restricting housing occupancy qualifications for up to 10 years for those who violate restrictions on housing resale.

Tenants Cannot Be Evicted Unless Rent Is Overdue for More Than Six Periods

The Democratic Party has also introduced amendments to protect tenants facing difficulties due to COVID-19.

Democratic Party lawmaker Jeon Yong-gi proposed an amendment to the Housing Lease Protection Act and Commercial Lease Protection Act that temporarily prohibits landlords from terminating contracts or forcibly evicting tenants unless tenants have overdue rent for six periods during the six months from July to December.

Currently, tenants cannot request contract renewal if they are behind on rent for two periods for housing or three periods for commercial properties.

In the United Future Party, lawmaker Lee Myung-soo proposed an amendment to the Local Tax Special Cases Act to protect landlords. The amendment provides that landlords participating in the 'Good Rent' campaign will receive an 80% deduction on property tax and other taxes for the reduced rent until next year.

This content was produced with the assistance of AI translation services.