Supply Bombardment is the Same... Lee's 'Public-Led' vs. Yoon's 'Private Supplement'

Presidential Election Candidates' Real Estate Pledges
Lee Jae-myung: Supply of 3 Million Housing Units... Introduction of 'Land Ownership Tax'
Yoon Seok-youl: Supplementing Private Reconstruction... Easing All Real Estate Taxes

[Asia Economy Reporters Kangwook Cho, Hyemin Kim, Dongpyo Kim] The prevailing view was that the upcoming presidential election would be decided by the 'real estate public sentiment.' Accordingly, each candidate competitively presented real estate pledges to respond to public opinion. However, even as the election approaches, the real estate issue has not heated up much. This is the result of candidates being overly cautious about the real estate vote. Both candidates Lee Jae-myung and Yoon Seok-yeol focused on 'populist' pledges, making their content quite similar, and ultimately, they could not find strong points to criticize each other. Although it did not emerge as a core election issue, there remains a need to pay attention to the direction the new government will take in the real estate market. Especially, even if there are similarities in the two candidates' pledges, a closer look reveals significant differences in their policy orientations.

◆ "I am a market-oriented person" Lee, 3.11 million housing units 'supply bomb' = Lee Jae-myung, the Democratic Party presidential candidate, has set a target supply volume exceeding 3 million housing units. This plan adds 1.05 million units to the 2.06 million units already announced by the current government. The supply method is public-led. A representative example is the 'Basic Housing' from Lee's trademark 'Basic' series. Basic Housing is public housing that guarantees anyone without a home can live for more than 30 years near transit stations or areas with high work-residence proximity at a low rent close to cost. However, the plan for securing funding is evaluated as unclear.

Another important real estate pledge from Lee is the introduction of a 'Land Holding Tax.' This system requires all landowners to pay a certain percentage of tax, but it faced public backlash and was not included in the official pledge book. However, if Lee comes to power, there is a high possibility it will be brought up again. Lee's camp stated, "If the Land Holding Tax is introduced, the comprehensive real estate tax will be phased out," and they intend to resolve issues by ensuring that the land portion of the comprehensive real estate tax or property tax is not double-taxed with the Land Holding Tax.

Regarding the three lease laws (Jeonse and monthly rent cap system, contract renewal request right, and lease reporting system), Lee's stance is close to maintaining the current system. He takes a reserved position on expanding the number of contract renewals and the period for tenants, as well as applying rent caps to new leases, stating that the results of the current three lease laws will be monitored. Seo Jin-hyung, president of the Korea Real Estate Society (professor at Gyeongin Women's University), criticized, "Are they just going to observe the ongoing instability in the rental market and conflicts between landlords and tenants after the three lease laws?" and pointed out that "a suspension or improvement of the three lease laws is necessary."

◆ "All real estate taxes eased" Yoon, three lease laws 'abolished' = Yoon Seok-yeol, the People Power Party presidential candidate, shares the strategy of stabilizing housing prices through a 'supply bomb' with Lee. However, Yoon approaches it as a means to complement private reconstruction. The difference is especially clear in tax policy. Yoon has pledged to ease virtually all real estate taxes. Notably, he announced plans to integrate the comprehensive real estate tax with the property tax, effectively abolishing it.

However, there are burdens in implementing these pledges. Integrating the national comprehensive real estate tax and the local property tax could concentrate tax revenue in the metropolitan area, where high-priced homes are concentrated, causing regional imbalances. Opposition from local governments is expected during the process. Yoon did not specify detailed methods but suggested freezing the official market price ratio, which affects the increase in official property prices, and lowering the 'tax burden cap' that limits how much the comprehensive real estate tax can increase compared to the previous year. However, attempts to reduce the comprehensive real estate tax burden could mistakenly signal that owning multiple homes is acceptable, and as a minor party candidate, there are clear practical limits to legal amendments.

Yoon's pledge to effectively abolish the three lease laws is also distinctive. He proposed reducing the current 2+2 year renewal right back to 2 years and providing tax benefits to landlords who do not raise Jeonse prices. However, this change could cause confusion, especially among existing tenants, and requires ruling party cooperation for legal amendments, making its feasibility uncertain. There are also criticisms that Yoon's public rental housing pledge is insufficient. Yoon pledged to supply 100,000 units annually, totaling 500,000 units over five years. Choi Eun-young, director of the Korea Urban Research Institute, said, "It is contradictory to pledge to completely resolve abnormal housing while announcing a smaller supply plan than the Moon Jae-in administration."

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