[Exclusive] Ministry of Land Revises Guidelines on Actual Residence Suspension for Multiple Homeowners After Ignoring Local Warnings

It was confirmed on March 7 that the Ministry of Land, Infrastructure and Transport reversed its position within a week after initially stating that lease contracts exercised under the right to request contract renewal would not be eligible for the temporary suspension of the actual residence obligation in designated land transaction permit zones.

During the initial process of notifying these guidelines to local governments, local government officials pointed out issues and immediately requested changes. However, the Ministry did not accept these requests. It was only after reports of confusion at the field level that the Ministry belatedly revised its guidelines.

On the 5th of last month, in front of a real estate agency located within a large apartment complex in downtown Seoul, information on apartment sales transactions from 2026 was posted. Photo by Dongju Yoon

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According to the "Temporary Work Processing Guidelines due to Temporary Suspension of Actual Residence Obligation" secured by The Asia Business Daily on this day, the standard for the suspension of actual residence obligation, known as the "initial termination date," was defined as "the initial termination date that has not been changed by contract modification or the exercise of the right to request contract renewal." This guideline was included in the materials distributed during a training session for local government officials conducted by the Ministry in Seoul on the 25th of last month.

On the 12th of the same month, the phrase "the initial contract termination date in the currently signed lease contract" was interpreted by the Ministry, through its internal materials, as limited to the date before the exercise of the renewal right. According to this guideline, contracts in which the lease period was already extended through exercise of the renewal right before February 12 would not be eligible for the suspension benefit.

Land transaction permit officials from the autonomous districts raised concerns about fairness during the training session held by the Ministry on the day the guideline was distributed. The suspension of the actual residence obligation is a temporary policy designed to provide an exit for multiple homeowners struggling to dispose of their properties due to tenant issues ahead of the end of the temporary capital gains tax relief. As of February 12, whether the original tenant is residing or an extended tenant is residing due to exercise of the renewal right, buyers are equally unable to move in, which is precisely what the temporary policy aimed to address.

Partial content of the "Temporary Work Processing Guidelines due to Temporary Suspension of Actual Residence Obligation" distributed by the Ministry of Land, Infrastructure and Transport on the 25th of last month to 25 autonomous districts in Seoul and some local governments in Gyeonggi Province. It specifies that "initial termination" means the initial termination date that has not been changed by contract modification or renewal request rights.

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However, the Ministry’s guideline excluded contracts where the renewal right had been exercised from eligibility. Despite identical circumstances, eligibility for the suspension varied depending on the form of the contract. Local government officials argued that in such cases, buyers would not be able to meet the actual residence requirements and therefore could not obtain the necessary permits, effectively blocking transactions by multiple homeowners. This was seen as contrary to the intended purpose of the supplementary measures. Nevertheless, at the time, Ministry officials insisted on using the initial contract termination date that had not been extended through the exercise of the renewal right as the standard, adhering to the original guideline.

The Seoul Metropolitan Government also recognized the inappropriateness of the situation and took action. It compiled the questions raised by the autonomous districts and requested the Ministry to re-examine the guidelines, identifying potential issues that could arise during implementation. However, the Ministry reiterated its existing stance.

The Ministry only changed its position on March 3, after media coverage highlighted cases where permits for houses under the renewal right were being denied. On that afternoon, the Ministry announced in a press release that the obligation of actual residence would be suspended until the end of the lease contract, regardless of whether the contract had been renewed, effectively overturning the guideline from a week earlier.

The official document sent to local governments on the same day redefined the meaning of the initial termination date as "the initial termination date that has not been changed by the exercise of the right to request contract renewal, implied renewal, or contract modification after the lease contract signed as of February 12." It also stated, "Whether the right to request contract renewal, implied renewal, or modification contract was exercised before the contract was signed is irrelevant."

The press release titled "Q&A on the End of the Grace Period for Multiple Homeowner Overweight Taxation and Supplementary Measures" distributed to the media on the 12th of last month. Although the amendment to the Enforcement Decree of the Real Estate Transaction Reporting Act was completed on February 27, some local governments caused confusion by accepting land permission applications before the amendment, using the example of "cases applying on February 12."

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Meanwhile, confusion was also found in the press release that accompanied the announcement of the supplementary measures. In a Q&A on the timing of land transaction permit applications subject to the suspension of the actual residence obligation, the Ministry presented an example: "If you apply on February 12, a permit can be obtained before March 10, which is 15 business days later." However, the amendment to the Enforcement Decree of the Real Estate Transaction Reporting Act, which forms the basis for this system, was only completed on February 27. This means it was not possible to apply for a permit under the suspended obligation on February 12, prior to the amendment. As a result of this example, four autonomous districts in Seoul even accepted permit applications before the amendment took effect.

However, as formal reviews only became possible after the amendment, applications received before the amendment were either supplemented or resubmitted after the change, and did not result in official denials. The real issue was that, at the pre-application stage, schedules became entangled or uncertainty increased, causing transactions to fall through. Such cases are not recorded in administrative records and therefore are not even counted in statistics.

Some observers have pointed out that this situation arose because the Ministry of Land, Infrastructure and Transport accumulated work as new policies were intensively pursued in a short period with limited manpower, and field feedback was not properly incorporated. However, as the guidelines were reversed, frontline local government officials who simply followed the Ministry’s instructions have ended up bearing the brunt of the confusion. While multiple homeowners voiced their complaints at district offices after being told that transactions would be difficult, online real estate communities were flooded with posts criticizing the district offices. In effect, frontline staff who dutifully followed the Ministry's guidelines became targets of public criticism.

An official from one of Seoul’s autonomous districts said, “We fully understand at the field level that confusion or mistakes can occur when implementing new policies. However, putting the blame on frontline civil servants who faithfully followed the guidelines is demoralizing for those responsible for carrying out these policies on the ground.”

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