Yoon "If You Work Hard, You Can Buy a House"... Indicates Further Deregulation

Message Delivered to Transition Team Real Estate TF... Master Plan Covering Taxation, Supply, and Finance to Be Established

[Asia Economy Reporter Baek Kyunghwan] President-elect Yoon Seok-yeol conveyed a separate message to the Presidential Transition Committee's (Transition Committee) Real Estate Task Force, asking them to "make it possible to buy a home if one makes an effort." Considering the simultaneous announcement of capital gains tax and LTV (loan-to-value ratio) easing, there is a high possibility that additional real estate policies focusing on 'tax cuts' will be introduced.

According to the Transition Committee on the 1st, President-elect Yoon made this statement during the economic division's briefing the day before and requested the Real Estate Task Force members to carefully identify factors that could reduce the burden on citizens in the process of purchasing a home. This message from President-elect Yoon was the first directive delivered to the Transition Committee after the completion of the ministry-by-ministry briefings over the past ten days. It effectively indicated a policy direction of 'reducing taxes and easing regulations,' and the Transition Committee also produced its first outcome by announcing the 'temporary exclusion of capital gains tax surcharges for multi-homeowners.'

He also requested the current government to amend the Enforcement Decree of the Income Tax Act in April to temporarily exclude the surcharge rate for multi-homeowners. If the current government does not take action, the new administration plans to amend the enforcement decree immediately upon its launch and implement a one-year suspension of the capital gains tax surcharge for multi-homeowners starting from the day after May 10, showing a strong determination to push forward.

Within the Transition Committee, President-elect Yoon's strong will for 'regulatory reform' is recognized, and it is expected that tax reform and deregulation agendas for supply will be extensively addressed in the ongoing selection of national tasks. The Real Estate Task Force is already discussing detailed plans to repeal or reduce the three lease laws.

However, internal opinions also indicate the need for preparation regarding public consensus formation and persuading the Democratic Party. Concerns about market side effects due to rapid institutional changes have been raised, and there is a possibility of slowing down some policies. For example, easing the comprehensive real estate tax (종부세) following the capital gains tax relief for multi-homeowners might reduce the effect of increasing listings from multi-homeowners.

Consideration of supply measures, another key pillar of the new government's real estate policy, has also begun in earnest. Since the basic policy is to secure supply through redevelopment projects rather than finding new sites in the metropolitan area, the Transition Committee is expected to release an official stance on easing redevelopment regulations.

After the first selection of national tasks is completed and the final plan is prepared by the end of this month, the new government's 'Real Estate Policy Normalization Master Plan' is expected to be established, encompassing tax reform, supply plans, and financial linkage measures. It will include ▲a roadmap to supply 2.5 million housing units ▲regulatory easing for redevelopment projects to expand urban supply ▲support for youth housing ▲support for vulnerable groups, with detailed discussions on implementation strategies considering housing supply and demand variables to be held with the Ministry of Land, Infrastructure and Transport and others.

A member of the People Power Party who was active in the presidential campaign headquarters said, "The current real estate market is not in a period of economic growth or population increase, and now we must also consider external economic factors such as interest rates and oil prices," adding, "Both the president-elect and the Transition Committee recognize that the current government's tax and regulatory policies have failed to improve supply efficiency, and real estate policies reflecting this will be prepared."