2023-12-06 18:39:12
Land, Infrastructure and Transport Committee bill subcommittee discussion fails
野 Opposes abolition for the reason of ‘preventing gap investment’. There will be general elections next year… In fact, even if the no-property resale restriction ends, pre-sale rights cannot be traded. In the worst case, they must be resold at the pre-sale price level. “Policy hasty hastened the public into confusion.”
The abolition of the actual residence requirement for apartments subject to the pre-sale price cap system was eventually blocked at the National Assembly and had to go through the process of being abolished. Restrictions on resale bundled in a package were relaxed last April, but the actual residence obligation was maintained, making confusion inevitable for the 48,000 households who believed in the government’s announcement and entered into subscriptions to win. There is criticism that the Ministry of Land, Infrastructure and Transport has incited confusion by introducing a half-baked policy in a situation where it was unable to obtain cooperation from the opposition party.
According to the National Assembly on the 6th, the Land, Infrastructure and Transport Committee held the National Land Bill Review Subcommittee on this day, but the Housing Act Amendment Bill, which includes relaxation of actual residence obligations, was completely omitted from the discussion agenda. Although the regular National Assembly ends on the 9th, the ruling and opposition parties have decided to hold an extraordinary session of the National Assembly this month and hold another subcommittee, so there is room for further discussion, but the differences between the ruling and opposition parties are significant, so the possibility of an agreement is low. Moving on to next year, we will be in the midst of a general election.
The actual residence obligation is a system that imposes an obligation on tenants of apartments under the sales price cap in the metropolitan area to reside there for 2 to 5 years from the date of occupancy following February 2021. The purpose is to prevent speculative demand and benefit actual consumers, as the sale price ceiling system has been applied and the units have been sold below the market price. However, it was pointed out that it restricted residential relocation and reduced the supply of new rentals, which are in high demand. The resale restrictions that the government bundled into a package with the first and third real estate measures this year were eased starting in April. On the other hand, the abolition of the actual residence requirement, which requires legal revision, had difficulty passing the National Assembly due to the opposition party’s strong opposition for reasons such as ‘gap investment’. There are bills pending in the National Assembly that would abolish the actual residence obligation or allow discontinuous residence, which would require the actual residence obligation to be met only within the retention period rather than immediately following moving in.
If the actual residence obligation is not lifted, pre-sale rights transactions will not be possible even following the resale restriction period ends. Failure to comply with the actual residence obligation may result in imprisonment of up to one year or a fine of up to 10 million won. In the worst case, the house must be resold to Korea Land and Housing Corporation (LH) at the sale price.
The apartments subject to the actual residence obligation are approximately 48,000 households in 72 complexes, including e-Pyeonhansesang Gangil Urban Bridge (593 households) in Sangil-dong, Gangdong-gu, Seoul, and Olympic Park Foreon (12,032 households) in Dunchon-dong. The adoptees who trusted the government and moved forward are feeling heartbroken. There are many actual consumers who are unable to move in right away due to lack of funds or school for their children, but they argue that it is unfair to enforce the actual residence obligation along with speculative forces.
In real estate online communities, posts discussing ways to avoid the law are coming up one following another. When the resale restrictions are lifted, a side contract is also being discussed to fulfill the actual residence obligation by trading the pre-sale rights and then living as a jeonse or monthly rent tenant for two years. However, an official from the Ministry of Land, Infrastructure and Transport explained that even if resale of pre-sale rights is released, the period of actual residence must be fulfilled, so the pre-sale right transaction itself is illegal.
Experts point out that the government’s hasty announcement encouraged confusion. Seo Jin-hyeong, a professor of public administration at Kyungin Women’s University, said, “The government should have first revised the law related to the abolition of actual residence requirement and promoted the abolition of resale restrictions,” adding, “They failed to seek cooperation from the opposition party and only confused the public.” Many believe that if the actual residence requirement is maintained, the recent real estate transaction cliff will further solidify.
The government’s position is that it will focus on passing the amendment for now as there is still the possibility of further discussion. When asked regarding the plan if the bill is scrapped, an official from the Ministry of Land, Infrastructure and Transport responded, “It is not appropriate to talk regarding the plan on the premise that it has not been passed.”
Sejong Okseong-gu, Seoul Reporter Yoon Soo-kyung
1701889073
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