Opposition Proposes '4 Laws to Ease Real Estate Regulations'... Reassessment of Restrictions in Speculative Areas

Integration and Reorganization of Regulated Areas
Hong Gi-won "Need to Improve Overlapping Regulations"

The Democratic Party of Korea is pushing for an amendment to the 'Four Real Estate Regulation Relaxation Laws' that includes abolishing the increased tax rates on capital gains tax and acquisition tax applied to real estate adjustment target areas, thereby easing the tax burden.

On the morning of the 17th, Representative Hong Gi-won, chairman of the Democratic Party's Special Committee on Housing Welfare, held a press conference and announced the 'Improvement Plan for the Real Estate Regulation Area System' (amendments to the Housing Act, Income Tax Act, Local Tax Act, and Urban and Residential Environment Improvement Act). Representative Hong stated that the related bills were submitted to the National Assembly earlier that morning.

The amendment consolidates the existing adjustment target areas, speculative overheating districts, and speculative districts into a single system called 'Real Estate Management Areas' and shortens the management process to two stages, managing areas step-by-step. In the first stage, only basic regulations such as finance and subscription/sale are applied, while in the second stage, additional regulations including finance, taxation, and redevelopment projects are applied along with the first stage regulations.

[Image source=Yonhap News]

In particular, the amendment abolishes the increased tax rates on capital gains tax and acquisition tax that were applied in the existing adjustment target areas. It plans to eliminate the tax rates imposed on the former 'speculative districts' and apply separate regulations to areas classified in the second stage. However, by narrowing the scope of regulations, this effectively lifts restrictions on speculative districts designated during the Moon Jae-in administration. Specifically, these include ▲financial regulations (strengthening the total debt service ratio by 10%) ▲tax surcharges (on acquisition tax and capital gains tax) ▲redevelopment projects (limiting the number of housing units supplied to reconstruction project association members), among others.

Regarding this, Representative Hong said, "At the center of the failure of real estate policy lies the regional real estate regulations," and added, "The government managed the real estate market by designating areas through the adjustment target areas, speculative overheating districts, and speculative districts systems, but due to the large number and overlapping designations, the purpose of the regulations became unclear and the market fell into confusion."

He continued, "Now that housing prices have fallen and the entire country except for four areas?Gangnam, Seocho, Songpa, and Yongsan?has been released from regulation, it is the right time to reform the real estate designation regulation system," and stated, "To restore trust, the Democratic Party must take the lead in improving real estate policy."

Earlier, in December last year, the ruling and opposition parties agreed to ease the criteria for imposing the comprehensive real estate holding tax, deciding that even if a two-home owner holds a house in an adjustment target area, the basic tax rate rather than the increased tax rate would apply.

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