"Why Sell Again After Withdrawing Listings?"... Market Unmoved by Allowing Sale of Homes with Existing Tenants

On the Ground: "Worries About Rental Shortages, Not More Listings"

As early as the end of this month, non-resident owners of a single home with tenants in designated land transaction permit zones will be able to sell their property. After the temporary suspension of the increased capital gains tax for multiple home owners ended on May 9, concerns have grown that the supply of homes for sale may decrease. In response, the government has decided to broaden the exceptions to the owner-occupation requirement within these zones. The government anticipates this will somewhat ease the bottleneck in housing supply. However, industry insiders generally responded by saying, "It is unlikely that a flood of properties will hit the market."

On May 12, the government announced that it would temporarily expand the exemption from the owner-occupation requirement within land transaction permit zones until the end of this year. If the buyer is not a homeowner, they will be allowed to delay moving in until the end of the current lease contract, even if they purchase a home with an existing tenant.

The overall market atmosphere on the day of the announcement was calm. The head of a real estate agency in Ahyeon-dong, Mapo-gu, Seoul, stated, "After 6 p.m. on May 9, the last day of the temporary suspension of the increased capital gains tax, multiple home owners withdrew their listings with tenants. Since these properties were only put on the market to avoid the increased tax, simply allowing the sale of homes with tenants will not bring these listings back to the market."

The agency head added, "Unlike in 2021, when gap investing was rampant and there was a surge in buying demand in regional areas, most current buyers are those renting in Seoul and purchasing a single property for investment purposes. They are unlikely to put their only property up for sale."

A property listing notice posted in front of a real estate agency in Seoul. Yonhap News Agency

The head of a real estate agency in Samseong-dong, Gangnam-gu, stated, "Since the policy was just announced today, we have not received any inquiries yet. There has been little reaction since prices have not fallen—which is necessary to spur market activity." He added, "While some listings from non-resident single-home owners may enter the market, it is unlikely to have a significant impact. If prices keep rising just by holding onto properties, there is little incentive to sell." He further commented, "Ultimately, the market will fluctuate depending on how much property tax is imposed, but we are not at that point yet."

There are also concerns that the rental market for mid- and lower-priced complexes under 1.5 billion won may tighten further. The head of a real estate agency in Gireum-dong, Seongbuk-gu, noted, "Even if landlords offer 50 million won in moving expenses, it is so difficult to find a new jeonse lease that tenants do not want to leave. In Gireum-dong, which is an area with strong demand for owner-occupiers such as newlyweds, if non-resident single-home owners sell their properties with tenants to first-time buyers, the supply of jeonse leases could dry up completely."

Experts also view this measure as a policy to enhance fairness, but they expect its impact on housing supply will be limited. Han Mondo, a graduate school professor at Myongji University, said, "There are single-home owners who need to sell due to reasons such as moving to a new home or personal circumstances, so this measure is a necessary supplement. It could help somewhat in increasing housing supply." However, he pointed out, "If the goal was to ease the bottleneck in supply, the exemptions from the owner-occupation requirement for both multiple home owners and non-resident single-home owners should have been implemented from the start."

Professor Han also emphasized the need for clear and detailed criteria. He explained that even among single-home owners, some properties are subject to separate regulations such as the owner-occupation requirement in complexes under the presale price ceiling system, so it is difficult to apply the same standard to all 'single homes with tenants.' He said, "Since the president has set the overall policy direction, the government should thoroughly define the scope of inclusion and exclusion and make a detailed announcement. If the system is still under review, a roadmap for implementation should also be provided to minimize market confusion."

An apartment complex in Gangnam-gu, Seoul. Yonhap News Agency

Park Wongap, Chief Real Estate Expert at KB Kookmin Bank, believes that this measure may have some effect in tempering a rapidly rising market. He stated, "If listings from non-resident single-home owners accumulate in the market, it could help prevent abnormal price surges where home prices jump by tens of millions of won even with a small number of transactions."

However, Park cautioned against assuming that an increase in listings alone will determine the direction of home prices. He explained, "It is too simplistic to believe that prices fall when listings increase and rise when listings decrease. Listings are just one of many factors influencing prices. If other factors—such as demand, interest rates, and investor sentiment—shift more significantly, prices could still rise even with more listings." Regarding the impact on the rental market, he added, "If a buyer who purchases a home from a non-resident single-home owner with an existing jeonse lease later decides to move in, the supply of jeonse rentals will decrease. This could further destabilize the rental market, making the outlook uncertain."

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