[Ryu Taemin's Real Estate A to Z] Pre-sale Rights vs Move-in Rights, Which Is More Advantageous?

Low Initial Investment for Pre-sale Rights, Higher Returns for Move-in Rights
Both Counted in Housing Numbers... May Be Subject to Higher Tax Rates
Move-in Rights Risk Project Delays, Pre-sale Rights Require Careful Total Cost Assessment

Apartment complex view in Seoul / Photo by Jinhyung Kang aymsdream@

[Asia Economy Reporter Ryu Tae-min] As expectations for deregulation of maintenance projects such as reconstruction and redevelopment grow, interest in securing a home through move-in rights and pre-sale rights is also increasing. Both move-in rights and pre-sale rights serve as guarantees that allow entry into new apartments at prices lower than market value. However, it is important to consider that each product differs in terms of registration status, initial investment cost, and taxation.

Move-in rights are the rights for association members of reconstruction or redevelopment projects to move into new homes. In redevelopment, one can acquire move-in rights by owning either land or housing, while in reconstruction, ownership of both land and building is required to obtain move-in rights. On the other hand, pre-sale rights are rights obtained by winning an apartment subscription. The developer and the general public enter into sales contracts for the remaining units after those allocated to association members.

Generally, move-in rights tend to have higher returns than pre-sale rights. This is because the association members’ sale price is set lower than the general sale price. This is due to the fact that all costs arising from project delays or increased project expenses must be borne by the association members. If the general sale fails and unsold units remain, the additional charges are also the responsibility of the association members, resulting in greater profits for them.

Conversely, pre-sale rights are noted for their advantage of lower initial investment costs compared to move-in rights. Since only a deposit equivalent to 10-20% of the total sale price is required for pre-sale rights, the initial investment cost is cheaper than that of move-in rights. Meanwhile, move-in rights given to association members are priced including the evaluation value of the existing building and settlement payments, making the initial investment cost relatively higher.

Both move-in rights and pre-sale rights are included in the calculation of the number of houses, which affects tax imposition criteria. However, pre-sale rights acquired before January 1 of last year are not included in the housing count. For example, if a person owns one house and also holds pre-sale rights, they are considered a one-household two-home owner and subject to higher tax rates.

Since pre-sale rights and move-in rights are ultimately ‘rights,’ caution is necessary when purchasing them. Move-in rights are finalized once the management disposition approval is completed, but since they are rights to homes not yet completed, risks such as project delays remain. On the other hand, pre-sale rights do not immediately secure ownership of the home. Only after paying the intermediate and final payments and completing the ownership transfer registration does it become a fully owned home, so these amounts must be included in the purchase price consideration.

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