Silent to Repair Requests for Monthly Rent Room... Turns Out the Landlord Is a Foreigner

Cumulative Foreign Transactions of Domestic Buildings in Q3 Reach Highest Since 2006

[Asia Economy Reporter Kim Min-young] While housing prices have soared to unprecedented levels this year, foreign purchases of domestic real estate have also reached record highs. As domestic real estate transactions have been restricted by loans, taxes, and transaction regulations, speculative purchases by foreigners, who face no constraints on funding, have surged, raising concerns about reverse discrimination.

According to the transaction statistics of buildings (based on the date of report) from the Korea Real Estate Board on the 9th, the volume of domestic building transactions by foreigners reached 16,405 cases from the beginning of this year through September. This is the highest transaction volume since related statistics began in 2006. This contrasts with the contraction of domestic transactions compared to last year due to government measures to curb housing prices such as loan reductions, acquisition and capital gains tax surcharges, and the Land Transaction Permission System. During the same period, foreign transactions of pure land (land excluding land attached to buildings) also reached 4,772 cases, marking the highest level since statistics began.

As foreign-owned real estate increases, there have been repeated complaints from tenants about inconveniences. Office worker A said, "The owner of the officetel I rent is Chinese, and while they collect the monthly rent diligently, it is difficult to contact them directly, and when repairs are needed, they ignore my attempts to reach out, which is frustrating." B said, "I am trying to sign a jeonse contract for a newly built officetel, but if the landlord is a foreigner, I am anxious about whether the jeonse loan will be approved smoothly and when and where I should sign and receive the Housing and Urban Guarantee Corporation (HUG) jeonse deposit return guarantee insurance bond transfer contract."

For foreigners, some local governments implement the Land Transaction Permission System targeting foreigners and corporations, but in practice, they only need to report after the real estate transaction, making them free from investigations into the source of funds compared to domestic residents. In July, a post on the Blue House National Petition Board stated, "Foreigners' funding plans and sources are less transparent than those of domestic residents," and "Illegal methods like hawala are openly used, and by sharing their investment methods, they are disrupting our country's real estate market."

As fairness issues arise between domestic and foreign real estate transactions, a bill has recently been proposed in the National Assembly to amend the Real Estate Transaction Reporting Act to apply the Land Transaction Permission System for up to five years in suspected foreign speculative transaction areas, restricting land and housing acquisitions. According to the National Assembly Legislative Information System, recently, 11 lawmakers including Kim Sang-hee of the Democratic Party proposed the ‘Amendment to the Real Estate Transaction Reporting Act’ focusing on introducing the foreigner Land Transaction Permission System. The current law allows designation of permission zones for land transaction contracts for a period of up to five years in areas prescribed by presidential decree. Currently, parts of Yongsan, Gangnam, and Songpa districts in Seoul are designated as land transaction permission zones. In these zones, houses can only be purchased for actual residence purposes, and sales and rentals are prohibited for two years, banning gap investments.

Professor Seo Jin-hyung of Gyeongin Women's University pointed out, "Currently, South Korea has a permission system for foreign land transactions, but none for the housing sector," and added, "It is necessary to establish a system to determine whether the buyer is a genuine user so that housing acquisition is centered on actual demanders rather than speculators."

A Gangnam District Office official said, "Except for areas designated under the Military Base and Military Facilities Protection Act or the Land Transaction Permission System, foreigners only need to report actual transaction prices for real estate sales and purchases."

Yoon Ji-hae, senior researcher at Real Estate 114, said, "The proportion of foreign market transactions in the overall real estate market is 1-2%, which is too small to influence real estate market price determination," but added, "However, it is important that the principles applied to domestic and foreign real estate transactions are the same to avoid domestic backlash, and to check for tax evasion when capital gains occur."

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