Concerns Over Side Effects Arise Everywhere Regarding 'Real Estate Overregulation Legislation'

Detailed Criticism of Real Estate Tax Law Passed by Legislation Committee
Judicial Administration Office Expresses "Concerns Over Rent Surge"
Market Voices "Excessive Infringement on Property Rights"

[Image source=Yonhap News]

[Asia Economy Reporters Inho Yoo, Hyemin Kim] The ruling party is facing growing concerns over the side effects of hasty legislation as it pushed through 11 bills related to the June 17 and July 10 real estate measures in the National Assembly's standing committees without even going through the subcommittee procedures, passing them in bulk without any stops. In fact, many of the bills have expressed concerns about side effects even in the review reports of the respective standing committees, raising the possibility that the bills may need to be revised again after their passage.

According to the National Assembly and government sources on the 29th, the Democratic Party of Korea's amendments to the Comprehensive Real Estate Tax Act, Income Tax Act, and Corporate Tax Act, which were passed by the National Assembly's Planning and Finance Committee the day before, have been pointed out by the committee's professional advisors as potentially causing side effects such as creating innocent victims. The main point is that strengthening transaction and holding taxes does not help stabilize the housing market.

The Planning and Finance Committee's professional advisor stated in the report, "When acquisition tax, comprehensive real estate tax, and capital gains tax on housing are all strengthened simultaneously, it is argued that it will become difficult both to dispose of and to hold housing, increasing taxpayers' tax burdens," adding, "If multi-homeowners give up sales or choose gifting due to capital gains tax burdens, there will be limits to increasing housing supply in regulated areas."

Regarding the proposal to raise the housing portion of the comprehensive real estate tax rate to a maximum of 6%, the advisor argued, "Some of the holding tax burden could be passed on by raising monthly rent prices," warning that "this could negatively affect tenants' housing stability." Additionally, concerning the proposal to strengthen the comprehensive real estate tax on housing owned by corporations, the advisor noted, "There is a concern that corporate property rights could be significantly restricted," and recommended that "legislative policy judgment should be made considering the principle of proportionality."

Tax increases related to real estate have already led civic groups to file constitutional complaints. On the 27th, groups such as Action Freedom Citizens, Public Interest Law Center, and Taxpayer Protection Center filed constitutional complaints requesting a review of the constitutionality of the Local Tax Act amendments, as well as the Comprehensive Real Estate Tax Act (Comprehensive Real Estate Tax Act), Income Tax Act, and Corporate Tax Act amendments.

[Image source=Yonhap News]

The Court Administration Office has also expressed a negative stance on the Housing Lease Protection Act submitted to the Legislation and Judiciary Committee. In an opinion submitted to the committee, the Court Administration Office stated, "While agreeing with the legislative intent, without meticulous policy design, side effects such as a surge in rent are a concern," and pointed out, "If long-term lease policies are introduced in Korea, there is a concern that social and policy burdens will be passed on to tenants as economic burdens such as rent increases."

The market is worried that hasty legislation could not only fail to stabilize the market but also cause confusion. If the bills are rushed through without serious consideration of protecting innocent victims caused by the law's enforcement, trust in government policies could plummet during the process of preparing supplementary legislation to resolve the issues. An industry insider said, "Many of the real estate-related bills are causing controversy over excessive infringement of property rights," and emphasized, "It is important to gain social consensus even if it means delaying legislation somewhat."

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