The real estate market is difficult to navigate.
The government’s policies on housing are equally challenging. This is where the difficulty in understanding the real estate market begins.
"We considered the buyer's circumstances." "The transaction was conducted transparently in accordance with civil law agreements." This is how the Blue House explained the mortgage transaction involving President Yoon Suk Yeol and his wife’s apartment in Bundang. The Democratic Party of Korea went further, stating that the mortgage established to secure unpaid balances is a "legal and normal transaction method" and that the loan regulations do not prohibit sellers from deferring payment. They also noted that the presidential couple accepted "unfavorable conditions" by delaying the receipt of the final payment.
If we accept this explanation, the transaction cannot simply be dismissed as defensive. It is a model transaction that is legal, normal, and considerate of the buyer's circumstances, where the seller even accepted unfavorable conditions. It deserves more than to be left to the goodwill of the president; it could be formalized as 'good seller financing.'
The presidential couple sold their apartment in Bundang, Seongnam, for 2.9 billion won, establishing a mortgage of 1.77 billion won with the buyer as the debtor. They transferred ownership before receiving the full payment and agreed not to charge interest on the unpaid amount. There was even an explanation that the transaction considered the issue of transferring reconstruction rights, showing consideration for the buyer.
According to the Blue House's explanation, the ownership was transferred before the final payment was made, leaving open the possibility of transferring reconstruction rights, with the unpaid amount to be repaid interest-free months later. This level of consideration justifies the term 'good seller.' The final payment is reportedly due at the end of October. However, the specific unpaid balance and the terms of repayment and delinquency have not been disclosed.
There are circumstances, but no system in place
Last year, the government reduced the housing mortgage loan limit to 200 million won for homes priced over 2.5 billion won in the metropolitan area and regulated zones. This was intended to strongly curb borrowing for high-priced homes. Even if one buys a house worth 2.9 billion won, the maximum mortgage available from financial institutions is 200 million won.
However, if the seller defers the final payment and secures a mortgage on the property, the situation changes. The buyer receives ownership before paying the full price and later repays the seller. The debt owed to the financial institution simply shifts to the seller, but the economic function of the debt for purchasing the house remains the same.
The Democratic Party's assertion that current laws do not prohibit this is correct. However, while legality is a legal answer, it is not a policy answer from the ruling party. The government has narrowed the front door for borrowing purchases, but it raises the question of whether it is acceptable for sellers to open a side door.
The Blue House emphasized the 'buyer’s circumstances.' But who among the public lacks circumstances? There are those who cannot sell their homes on time or have not received their security deposits. Many face conflicting schedules for moving in, loans, and taxes.
The issue is not about who is in a more difficult situation. It is about which circumstances the system will accommodate and whose circumstances will be left to individual resolution. If the government and ruling party intend to justify the transaction based on the need to maintain reconstruction membership, they must first clarify the criteria for recognizing which circumstances apply to whom.
If it's 'common,' let's manage it with statistics.
The Democratic Party stated that mortgages are commonly used in real estate transactions. However, saying that the mortgage as a collateral device is common is different from saying that it is typical for sellers to leave a significant portion of the high-priced home sale price interest-free for months.
An analysis of housing financing plans from January to May this year by Kim Eun-hye's office revealed that transactions classified as having a mortgage established between buyers and sellers accounted for only 3.87% of all apartment transactions. For apartments priced between 2.5 billion won and 3 billion won, it was 5.96%. These figures make it difficult to call it a mainstream transaction in that price range.
However, in Yangji Village, where the president's apartment is located, there have been numerous transactions where sellers have taken on the role of mortgagee ahead of reconstruction project procedures. This suggests that such transactions are concentrated in specific complexes rather than being a common method across the market.
The commonality of the mortgage as a collateral tool and the unusual conditions of this transaction, where a significant portion of the high-priced home sale price is deferred interest-free for months, are separate issues. If the president is to be emphasized for accepting unfavorable conditions as a special consideration, it should not be lumped together with the notion of a typical transaction.
The market is already seeing listings for high-priced homes with terms like 'owner loans,' 'seller mortgage options,' and 'final payment loans.' Homeowners are beginning to fill the gap left by tightened bank loans. If loan regulations have not eliminated debt but pushed it off the books of financial institutions, it is no longer a matter of relying solely on personal goodwill or informal private contracts.
'Good seller financing' should be formalized.
The starting point for formalization is not support but reporting and management. If, as the Blue House and the Democratic Party explain, this is a legal and normal transaction, then standards should be established to distinguish seller financing from other private borrowing for reporting and management.
The deferral of final payments between parties should be classified as a separate item in the financing plan, detailing the actual unpaid amount, interest rate, maturity, and repayment sources. It should also be determined whether to combine it with financial institution loans and how to manage repayment capacity.
There should also be distinctions regarding policy support or special treatment. Criteria are needed to determine whether to limit it to actual residents without homes or to include delays in disposing of existing homes or transferring reconstruction rights. The taxation principles for economic benefits arising from interest-free or low-interest deferrals must also be clarified.
Sellers also bear the risk of not receiving large final payments on time. This is why a standard contract that includes delinquency rates, collateral execution, and priority rights confirmation criteria is necessary.
The government has labeled those who reduce rents as 'good landlords' and provided tax deductions. According to the government’s logic, there is no reason not to give the same name and benefits to those who wait interest-free for the sale price, considering the buyer's circumstances. A concrete example of a presidential transaction already exists.
Of course, formalizing this will require acknowledging uncomfortable truths. The unpaid debts owed to sellers are also debts incurred to purchase a home. If managed alongside financial institution loans, those unpaid amounts would also fall under the housing acquisition debts the government intended to manage. If left unmanaged, it becomes a regulatory bypass available only to those with financial flexibility who find a trusting homeowner.
This is not a matter to be neglected simply because it is not prohibited, nor should it end as a heartwarming story of presidential consideration. If the government and ruling party's explanations are correct, then the actual debt amounts and interest and maturity conditions should be reported, and rules for how to manage them should be made public. If exceptions cannot be made, they should not be packaged as presidential goodwill or exemplary behavior.
No citizen is without circumstances. The important question is not who is in a more difficult situation, but how policies will accommodate which circumstances based on what criteria. 'Good seller' President, please consider the circumstances of the people as part of the system.
* This article has been translated by AI.
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