Land Lease Sale Housing, Rent Reduced by Up to 840,000 KRW Annually

The annual land lease fee burden for land lease-type sale housing in Godeok Gangil 3 and Magok will be reduced by approximately 480,000 to 840,000 KRW.

Site of the groundbreaking ceremony for Godeok Gangil Complex 3 held on May 31, 2023 (Photo by SH Corporation)

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On the 10th, Seoul Housing and Communities Corporation (SH Corporation) announced that, following the amendment of the 'Value-Added Tax Act Enforcement Decree' on the 29th of last month, the value-added tax on land lease fees for land lease-type sale housing is exempted.

Based on the 59㎡ pre-sale complex of the century housing (land lease-type sale housing) supplied by SH Corporation, it is expected that the annual lease fee burden will decrease by 480,000 to 840,000 KRW.

For general sale housing, value-added tax is exempted for units at or below the size of national housing standards. SH Corporation judged that exemption of VAT on land lease fees for land lease-type sale housing is necessary to reduce housing costs and requested the Ministry of Economy and Finance for system improvement last November.

Additionally, the enforcement decree and enforcement rules of the Housing Act, which allow private transactions after the resale restriction period for land lease-type housing and prepayment of land lease fees, were also announced for legislative notice on the 5th.

Purchasers of land lease-type sale housing can freely trade buildings in the market after the 10-year resale restriction period. Before the resale restriction period begins, after the mandatory residence period (5 years) has passed, the public can repurchase the unit at the move-in price plus 70% of the market price gain.

The corporation plans to prepare measures to apply exclusive loan products to land lease-type sale housing, which is a New:Home sharing-type housing. It also plans to actively request the Ministry of Land, Infrastructure and Transport and the National Assembly to enact the 'Special Act on Building Sale Housing' (tentative name), which includes comprehensive legal grounds.

Kim Heon-dong, president of SH Corporation, said, "Century housing that sells buildings only significantly lowers initial housing costs by selling only the building, and the exemption of VAT on land lease fees has further eased the burden on purchasers," adding, "We will continue to do our best to ensure housing stability for citizens without homes."

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