Revised Brokerage Fee Plan Finalized... '9 Million → 5 Million Won' for 1 Billion Won Home Transactions

Reduction of Brokerage Fee Burden for Housing Sales and Rentals
"High Brokerage Fee Burden" Considered in Response
Improved Quality of Brokerage Services... Increased Liability Coverage Limit

(Data provided by the Ministry of Land, Infrastructure and Transport)

The revision plan for brokerage fees has been finalized. The upper limit rates for brokerage fees on housing sales transactions priced at 600 million KRW or more will be reduced by 0.1 to 0.4 percentage points compared to the current rates. Accordingly, the maximum brokerage fee for a 900 million KRW house transaction will drop from the current 8.1 million KRW to 4.5 million KRW. This measure reflects concerns that the rapid rise in housing prices has excessively increased the brokerage fee burden on the public.

The Ministry of Land, Infrastructure and Transport announced on the 20th that it has finalized the "Real Estate Brokerage Fees and Brokerage Service Improvement Plan" containing these details.

First, the upper limit rates for brokerage fees on sales transactions priced at 600 million KRW or more and lease transactions priced at 300 million KRW or more will be lowered. The current upper limit rates for sales brokerage fees are 0.6% (up to 250,000 KRW) for under 50 million KRW, 0.5% (up to 800,000 KRW) for 50 million to 200 million KRW, 0.4% for 200 million to 600 million KRW, 0.5% for 600 million to 900 million KRW, and 0.9% for 900 million KRW or more.

(Data provided by the Ministry of Land, Infrastructure and Transport)

Brokerage Fee for 1 Billion KRW House Drops from 9 Million to 5 Million KRW

The revision plan keeps the rates unchanged for transactions under 600 million KRW, changes the rate to 0.4% for 600 million to 900 million KRW, 0.5% for 900 million to 1.2 billion KRW, 0.6% for 1.2 billion to 1.5 billion KRW, and 0.7% for over 1.2 billion KRW. The key point is that brokerage fees for housing sales priced at 600 million KRW or more, which have increased in the metropolitan area due to rising housing prices, will decrease, and the current highest upper limit rate of 0.9% will be lowered to 0.7%.

The Ministry of Land, Infrastructure and Transport and the Korea Research Institute for Human Settlements announced three revision plans on the 16th. Plans 1 to 3 maintain the current rates for amounts under 200 million KRW but differ slightly in the application of upper limit rates for higher brackets. The finalized plan corresponds to Plan 2. Previously, analyses suggested that Plan 1 favored consumers, Plan 3 favored licensed real estate agents, and Plan 2 was the most likely compromise.

According to the final revision plan, the actual brokerage fee burden will decrease significantly. For a 600 million KRW house transaction, the upper limit drops from 3 million KRW to 2.4 million KRW, and for a 1 billion KRW house transaction, the burden decreases from 9 million KRW to 5 million KRW. For a 1.2 billion KRW house, the upper limit brokerage fee burden significantly reduces from 10.8 million KRW to 7.2 million KRW. The rates for the 900 million to 1.5 billion KRW transaction range have been subdivided, and a new highest bracket for transactions over 1.5 billion KRW has been introduced to alleviate the sharp increase in fee burdens due to rising transaction amounts.

Reduction in Lease Brokerage Fee Burden... Reversal Phenomenon Also Resolved

(Data provided by the Ministry of Land, Infrastructure and Transport)

Brokerage fee burdens for lease transactions will also decrease significantly. The current upper limit rates for lease brokerage fees are 0.5% (up to 200,000 KRW) for under 50 million KRW, 0.4% (up to 300,000 KRW) for 50 million to 100 million KRW, 0.3% for 100 million to 300 million KRW, 0.4% for 300 million to 600 million KRW, and 0.8% for 600 million KRW or more.

However, the revision plan keeps rates unchanged for under 300 million KRW, changes to 0.3% for 300 million to 600 million KRW, 0.4% for 600 million to 1.2 billion KRW, 0.5% for 1.2 billion to 1.5 billion KRW, and 0.6% for over 1.5 billion KRW. The lease brokerage fee rates were also decided based on Plan 2 previously disclosed by the Ministry, but the rate ceiling for the 600 million to 900 million KRW bracket was raised from 0.3% to 0.4% to reflect some opinions from the brokerage industry raised during a forum.

According to the revision plan, the upper limit burden for housing lease brokerage fees will decrease as follows: for a 300 million KRW house, from 1.2 million KRW to 900,000 KRW; for a 400 million KRW house, from 1.6 million KRW to 1.2 million KRW; and for a 500 million KRW house, from 2 million KRW to 1.5 million KRW. The upper limit brokerage fees for the 600 million to 1.1 billion KRW range will be halved. For a 600 million KRW house, the fee drops from 4.8 million KRW to 2.4 million KRW, and for a 900 million KRW house, from 7.2 million KRW to 3.2 million KRW.

This brokerage fee revision is also expected to resolve the reversal phenomenon where lease brokerage fees were higher than sales fees. For example, previously, when trading an 800 million KRW house, due to rate imbalances, the sales brokerage fee was 4 million KRW, but the lease brokerage fee was higher at 6.4 million KRW. To address this, the government revised the rates so that lease brokerage fees are set to be equal to or lower than sales brokerage fees in all brackets.

Liability Coverage Limit for Licensed Real Estate Agents Doubled

Increase in Liability Coverage Limit for Licensed Real Estate Agents (Data provided by Ministry of Land, Infrastructure and Transport)

The revision plan also includes measures to improve the quality of brokerage services. First, to strengthen consumer protection, the liability coverage limit (brokerage association indemnity fund) for licensed real estate agents in case of brokerage accidents will be increased. For individuals, the limit will double from 100 million KRW per year to 200 million KRW, and for corporations, from 200 million KRW per year to 400 million KRW.

Additionally, the statute of limitations for claims on the brokerage association's indemnity fund will be extended to match the civil law statute of limitations for damages claims (3 years). The composition of the compensation review committee will be diversified and selection criteria clarified to ensure various opinions are considered during indemnity payment reviews.

The association will establish a "consumer complaint consultation window" and promote the provision of complaint consultation services through collaboration with consumer organizations. The aim is to enhance service quality by expanding explanations of laws and systems related to brokerage and providing information on procedures for responding to brokerage accidents.

In particular, to mediate conflicts that may arise during brokerage transactions, the government plans to actively introduce a provisional "Dispute Mediation Committee" involving local governments, brokerage associations, and consumer organizations.

Verification and explanation documents will be strengthened by adding items related to facilities and confirming the years of use before brokerage transactions. The rights-related section of the verification and explanation documents will specify contract periods, deposit amounts, and other lease rights to minimize disputes. For multi-family housing transactions, which frequently experience accidents, rights-related information will also be included in the verification and explanation documents.

Furthermore, to prevent consumer damage caused by false or misleading advertisements of brokerage properties online, monitoring of listings and advertisements will be expanded. The government plans to impose fines if discrepancies are found between transaction information in the actual transaction system and online listings, such as properties remaining listed after transactions are completed.

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