The government will expand the deferment of the owner-occupation requirement under the land transaction permit system to cover not only homes held by multi-homeowners but also all homes that currently have tenants. Only when the buyer is without a home will application of the permit system be temporarily waived through the end of this year.

The Ministry of Land, Infrastructure and Transport said on the 12th, “When a person without a home trades a tenant-occupied home within a land transaction permit zone, we will, starting on the 13th, pre-announce for public comment an amendment to the Enforcement Decree of the Real Estate Transaction Reporting Act that defers move-in until the expiration date of the existing tenant’s lease.”

Across all of Seoul and 12 areas of Gyeonggi Province where the permit system applies, a buyer who purchases a home must move in within four months and reside there for two years.

The deferment applies, as of today, to all homes being rented within land transaction permit zones such as Seoul, and an application for a land transaction permit must be filed by December 31. Because eligible buyers are limited to ‘those who have continuously had no home since the announcement date (the 12th)’, even if someone sells a home after today and becomes without a home, the deferment does not apply.

Since the owner-occupation requirement is deferred only until the expiration of the existing tenant’s lease contract, timelines may vary by lease, but the buyer must move in no later than May 11, 2028, which is two years from now.

This is intended, as the government had signaled, to open selling opportunities even for ‘single-home owners who do not live in the property’. For homes owned by multi-homeowners, the government already announced in February a measure deferring the owner-occupation requirement for the buyer.

Kim Yoon-deok, Minister of Land, Infrastructure and Transport, said, “This expansion of the move-in deferment is being implemented while upholding the principle of prohibiting gap investment,” adding, “It will resolve fairness issues among sellers and is expected to encourage those who had hesitated to sell because they had tenants to put their homes on the market more actively.”

According to data from the Ministry of Land, Infrastructure and Transport and the real estate big-data platform Asil, the number of Seoul apartment listings increased from around 60,000 in early February to around 75,000 in early March before and after the announcement of the deferment for homes owned by multi-homeowners. The number of sales transactions rose from about 5,600 in February to about 6,400 in March.

However, for ‘single-home owners who do not live in the property’, it is uncertain whether a price-softening effect from inducing listings will materialize as it did for multi-homeowners. When the owner-occupation requirement was deferred for homes owned by multi-homeowners, there was a lever and deadline in the form of the ‘end of the temporary suspension of heavy capital gains tax for multi-homeowners on May 9’. In other words, multi-homeowners had a relatively clear incentive to sell before May 9 to save on taxes.

Most observers say multi-homeowners who were going to sell have already sold, and the non-resident single-home owners targeted by the government do not have a clear incentive to sell. When tax law revisions are taken up in July, a plan to reduce the long-term holding special deduction for such owners could be discussed, but it remains uncertain.

There is also the political variable of the June local elections. Ham Young-jin, head of Woori Bank’s Real Estate Research Lab, predicted, “In fact, single-home owners do not face a particularly heavy tax burden, and even if they own a high-priced home, they likely bought it for the purpose of a ‘one smart home’, so they will not sell easily.”

At a briefing that day, Jeong Woo-jin, land policy director at the Ministry of Land, Infrastructure and Transport, said, “Compared with the previous case, where (for multi-homeowners) pressure was clear because failure to sell by May 9 would trigger heavy capital gains tax, there is a less certain aspect this time,” while adding, “There have been many civil petitions asking why we are not lifting (the owner-occupation requirement) for non-resident single-home owners as well, so we still expect a considerable effect.”