SEOUL, August 06 (AJP) - The first public debate over the Lee Jae Myung administration's proposed property tax overhaul quickly laid bare tenants' biggest fear: being forced from their homes as landlords reclaim properties or sell them to qualify for lower taxes.
At a livestreamed forum hosted by the Seoul Metropolitan Government on Thursday, tenants, homeowners, real estate agents and housing experts warned that stronger tax incentives for owner occupancy could further tighten Seoul's already strained rental market by reducing the supply of jeonse and monthly rental homes.
"Paying rent and maintenance fees every month is already a considerable burden," said Kim Min-jung, who secured a rental home shortly before starting her first job in Seoul in June.
"I'm also worried that stronger owner-occupancy requirements could mean I have to leave even the home that was already so difficult to find."
Kim said tighter eligibility rules for jeonse loans and dwindling rental supply had already pushed many young tenants away from Korea's traditional lump-sum deposit rental system and into more expensive monthly leases.
Park Jun, who has operated a real estate agency in Seoul's Songpa District for 21 years, said the decline in rental listings had already accelerated after the capital was designated a land transaction permit zone.
Under current rules, buyers must occupy newly purchased homes for at least two years after completing the purchase. The proposed tax overhaul, he said, would give landlords another incentive to reclaim homes that had previously been rented out.
"Jeonse and monthly rental listings have already plunged as landlords move back into their properties," Park said.
He warned that the pressure could intensify once major reconstruction projects such as Eunma Apartments and Jamsil Jugong Complex 5 begin relocating residents.
"Between 15,000 and 17,000 people could be looking for homes at the same time," he said. "That could trigger a serious jeonse shortage. Urgent measures are needed."
Housing experts argued the proposal risked treating symptoms rather than the underlying causes of soaring home prices.
Kim Ji-yeop, a professor of architecture at Sungkyunkwan University, likened the government's approach to Don Quixote attacking windmills.
"The government's housing policy reminds me of Don Quixote fighting windmills," Kim said. "The enemy is somewhere else, but the government is fighting the windmills."
Rather than relying on higher property taxes to cool prices, he said, policymakers should encourage private-sector housing supply, ease regulations and support a wider range of housing options.
Other participants questioned whether the overhaul was designed primarily to stabilize home prices, raise tax revenue or redistribute wealth. Some described the proposed increases in holding and capital gains taxes as punitive, particularly for elderly homeowners, long-term owners and people unable to occupy their homes because of work or family obligations.
The proposed revision would raise annual comprehensive real estate holding taxes on owners of high-value and multiple homes, gradually increase rates on tax bases exceeding 600 million won ($432,000), and reduce long-term capital gains tax deductions by placing greater emphasis on how long owners have actually lived in a property. Critics argue those incentives would encourage landlords to withdraw rental housing from the market.
Seoul Mayor Oh Se-hoon said comments describing the proposed tax increases as a form of "state violence" had resonated with him.
He warned that penalizing owners who do not live in their homes could encourage them to sell properties, move into them or pull them from the rental market altogether, reducing rental supply and ultimately hurting the very tenants the policy is intended to protect.
AJP Takeaways
• South Korea's proposed housing tax overhaul is triggering fears of a tighter rental market, with tenants warning that stronger owner-occupancy incentives could encourage landlords to reclaim homes or sell properties.
• The first public debate in Seoul shifted attention from tax fairness to tenant displacement, highlighting concerns over shrinking supplies of jeonse and monthly rental housing.
• Housing experts argue higher property taxes alone will not stabilize home prices, calling instead for greater private-sector housing supply and regulatory reform.
• Seoul Mayor Oh Se-hoon warned the tax changes could backfire, reducing rental listings and hurting tenants despite the government's aim of cooling the housing market.
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