Non-Resident Single-Home Owners Can Now Sell Tenant-Occupied Properties as Owner-Occupancy Exemption Expands

Pre-announcement of Real Estate Transaction Reporting Act Amendment on May 13

Owner-Occupancy Exemption Applications Possible from Late May

Exemption Also Applies to Multiple-Homeowners Selling Tenant-Occupied Homes

Limited to Buyers

Starting as early as the end of this month, even non-resident owners of a single home with tenants in designated Land Transaction Permission Zones (LTPZs) will be allowed to sell their properties. The government has decided to expand the temporary suspension of the owner-occupancy requirement, which had only applied to multiple-home owners, to cover all homes with tenants in these areas. This measure is intended to address concerns that the return of heavy capital gains taxes for multiple-home owners could lead to a decrease in properties being put on the market, and it is expected to increase the number of listings in the future.

A view of apartments in downtown Seoul from Lotte World Tower in Songpa-gu, Seoul. Photo by Yonhap News Agency

The Ministry of Land, Infrastructure and Transport announced on the 12th that it will issue an advance notice of legislation for a revision to the Enforcement Decree of the Real Estate Transaction Reporting Act, reflecting these changes, starting on the 13th. Previously, in LTPZs, only multiple-home owners selling a tenanted property could have the owner-occupancy requirement deferred until the end of the current lease contract. Now, the scope will be expanded to all homes with tenants.

Kim Itak, First Vice Minister of Land, Infrastructure and Transport, stated during a briefing on the same day, "Since the occupancy requirement deferment only applied to some multiple-home owners, there was an issue of fairness between non-resident single-home owners and multiple-home owners who could not benefit from this. We intend to expand the deferment of the owner-occupancy requirement, which had been applied only to some multiple-home owners, to all homes for those applying for land transaction permission by the end of this year."

This policy will apply to buyers who apply for land transaction permission by December 31. The deferment of the owner-occupancy requirement will be granted until the original expiration date of the lease contract in effect as of May 12, the day the exemption was announced, just as it was for multiple-home owners. After obtaining permission, buyers must acquire the property within four months and must move in no later than May 11, 2028.

Multiple-home owners who had rushed to sell their properties ahead of the reimposition of the capital gains tax surcharge will also be eligible for this deferment. Previously, on May 9, the government decided to allow only multiple-home owners who applied for land transaction permission to defer their owner-occupancy requirement, but with this new measure, even properties with existing tenants can continue to be sold in the future.

However, to prevent this measure from turning into a speculative "gap investment" strategy, the government plans to restrict the deferment of the owner-occupancy requirement only to buyers who have remained without any homeownership since the policy announcement. This is to block homeowners from selling and then purchasing more expensive properties. An official from the Ministry of Land stated, "To prevent the use of this measure for property upgrading and to expand opportunities for genuine first-time homebuyers, the deferment will be limited to those who have remained without a home since today's announcement."

The market expects that this measure will lead to an increased supply of properties for sale. Nam Hyukwoo, a researcher at Woori Bank's Real Estate Research Institute, said, "Given the number of non-resident single-home owners in Seoul, it is positive that the potential supply of properties that could come to market has expanded." Park Wongap, Chief Real Estate Expert at KB Kookmin Bank, added, "This measure is intended to encourage non-resident single-home owners to put their properties on the market. As the number of listings increases, it can help prevent abnormal price spikes from just one or two transactions."

However, some are concerned that allowing the sale of all tenanted properties could reduce the supply of rental homes. There are worries that the market may shift toward owner-occupancy, cutting off the supply of lease properties.

In response, an official from the Ministry of Land explained, "If current tenants who do not own a home are able to buy, the demand for leases will decrease accordingly, so there should be no overall issue for the rental market in terms of total volume. However, since loans will not be available if the jeonse price exceeds 40% of the loan-to-value (LTV) ratio due to lending regulations, buyers with sufficient capital will need to purchase for their own occupancy."

However, experts have pointed out that the policy does not take into account the multiplier effect of reduced rental supply. Yoon Sumin, a senior specialist at NH NongHyup Bank, said, "A decrease of just one rental property can act as a catalyst in the market and actually lead to a much larger reduction in total supply. There is a strong possibility that instability (and price increases) in the rental market will be exacerbated."

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