Kim Heondong "If Public Rental Property Tax Exemption Is Not Granted, Rent Increase Is Inevitable" (Comprehensive)

[Image source=Yonhap News]

[Asia Economy Reporter Kim Hyemin] Kim Heondong, president of Seoul Housing and Communities Corporation (SH Corporation), publicly requested the government and the National Assembly on the 23rd to exempt holding taxes imposed on public rental housing. He also stated that if the request is not accepted, rent increases will be inevitable.

On the same day, Kim held a press briefing at the Seoul headquarters and said, "It is unreasonable to apply the same holding tax rate to public rental housing for vulnerable housing groups as to general multi-homeowners," making this request.

The holding taxes imposed on public rental housing owned by SH Corporation, including property tax and comprehensive real estate holding tax, amounted to 70.5 billion KRW last year. It was 23.9 billion KRW in 2018 and 39.5 billion KRW in 2020, but surged 1.8 times in one year. Property tax increased 1.2 times to 32 billion KRW, and comprehensive real estate holding tax increased 2.9 times to 38.5 billion KRW. Rental income was 136.9 billion KRW, meaning half of the income was spent on holding taxes.

Property tax on public rental housing was exempted until before 2011 as it was classified as a purpose business of local corporations. However, after the enactment of the Local Tax Special Cases Act, the local tax reduction rate was gradually reduced, increasing the burden accordingly. Additionally, SH Corporation explained that last year's amendment to the comprehensive real estate holding tax law significantly increased the highest tax rate for multi-homeowners, and the number of rental houses exceeding the exclusion criteria due to rising housing prices increased, causing a sharp rise in comprehensive real estate holding tax burden.

Kim said, "If the rent for public rental housing is set at the same level as market rental housing, about 1.6 trillion KRW in income would be generated, but actual rental income is about 140 billion KRW," and argued, "It is unreasonable to impose the same heavy holding tax on public housing operators, who are subject to regulations on property rights such as rent setting, as on general multi-homeowners."

In fact, advanced countries such as the United States, Canada, and France exempt holding taxes on public rental housing for long periods as a form of support. New York exempts for 50 to 60 years, and Toronto exempts property tax on the condition that the exemption amount is used for maintenance and repair of rental housing.

SH Corporation plans to actively request holding tax exemption to the Ministry of Economy and Finance, Ministry of the Interior and Safety, and the National Assembly in the future.

Kim especially emphasized, "Imposing punitive comprehensive real estate holding tax on public rental housing that is not for speculative purposes does not align with the policy objectives of the law," and said, "Public rental housing should be unconditionally excluded from the comprehensive real estate holding tax aggregation." He also requested, regarding property tax, "Please amend the Local Tax Special Cases Act to exempt property tax for a long period regardless of housing type, area, or ownership entity, considering the need to secure resources for public rental housing and its contribution to housing welfare."

He added, "With the exemption of holding taxes on public rental housing, institutional improvements are necessary so that more vulnerable housing groups can live in quality public rental housing."

Kim also stressed, "SH Corporation has frozen rents for the past 10 years, but if taxes are not reduced, increases are inevitable," and said, "Ultimately, the burden will fall on residents of public rental housing." He mentioned, "If necessary, I will request a direct meeting with the Minister of the Interior and Safety or the Deputy Prime Minister for Economy," and added, "We are also considering ways to recover the comprehensive real estate holding tax paid so far through a constitutional lawsuit."

He continued, "If Korea Land and Housing Corporation (LH) or other city and provincial urban development corporations seek cooperation, we can correct this issue together," emphasizing joint response.

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