[Exclusive] Democratic Party to Ease Income Requirements for LTV Benefits for Homeless Homebuyers

'LTV 90%' Means 10% Home Price Down Payment and Long-Term Rental Followed by Sale Conversion in the 'Nugunajib' Project

[Image source=Yonhap News]

[Asia Economy Reporter Park Cheol-eung] The Democratic Party of Korea is pushing for a plan to relax the income requirements that give preferential treatment to LTV (Loan-to-Value ratio) for non-homeowners. The current combined annual income limit for couples, set at 80 million to 90 million KRW, is expected to be raised to around 100 million KRW or more. However, it seems unlikely that the blanket application of '90% LTV for non-homeowners,' as pledged by Democratic Party leader Song Young-gil, will be implemented.

On the 6th, Representative Yoo Dong-su, a member of the Democratic Party's Special Committee on Real Estate, told Asia Economy in a phone interview, "It is important how we change the income requirements that give preferential LTV treatment to non-homeowners," adding, "Considering the burdens of housing and education expenses within income, it is necessary to raise the threshold to expand the eligible group beyond the current criteria." Representative Yoo has played a key role, attending the 'Real Estate Status Report to Related Ministries' meeting on the 4th in place of Jin Sun-mi, who was replaced as the special committee chairperson.

Currently, non-homeowners can receive a 10 percentage point LTV preference: 50% in speculative areas and speculative overheating districts, and 60% in regulated areas. The combined annual income of couples must be 80 million KRW (90 million KRW for first-time buyers), but this condition is set to be adjusted.

Representative Yoo said, "House prices have surged, and homeowners are gaining capital gains, so the intention is to reconnect the ladder that has been broken for non-homeowners," adding, "There will likely be strong demand from non-homeowners earning higher incomes than the current standard who want to buy homes."

However, since the Financial Services Commission raised and eased the income criteria by 10 to 20 million KRW depending on the region as part of housing market stabilization measures last July, there may be public opposition to adjusting it again in less than a year.

It appears unlikely that the LTV for non-homeowners will be uniformly raised to 90%. Representative Yoo said, "The 'Nuguna Jip' (Anyone’s House) project that Leader Song has talked about is a model similar to 90% LTV," explaining, "It allows people to pay 10% of the house price and live in it like their own home for 10 years. It is practically difficult to set the LTV at 90% when non-homeowners take out loans." The 'Nuguna Jip' project was introduced by Leader Song during his tenure as mayor of Incheon, allowing residents to pay rent and live for 10 years before converting to ownership.

Representative Yoo added, "We will review not only loan regulations but also tax policies such as comprehensive real estate tax, keeping all options open," and said, "Once the government’s simulation results based on related data come out around next week, we will examine them accordingly."

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