Predictability is crucial in real estate policy more than in any other area. Real estate constitutes a significant portion of national assets, and decisions regarding buying or holding property can impact household finances for years, even decades. This is why the market reacts sensitively whenever the government alters a real estate regulation.
Recently, the government's real estate policies have been adjusted repeatedly just months after their implementation or announcement. On September 17, the Ministry of Land, Infrastructure and Transport extended the deadline for applications to waive the actual residence requirement for rental housing in designated land transaction permission zones from the end of this year to the end of next year. This adjustment also includes not only current rental contracts but also renewal contracts. This change comes about four months after the government expanded the actual residence waiver system in May. Earlier, in early August, the government announced a tax reform plan that would reduce the basic exemption for the comprehensive real estate tax for non-resident homeowners from 1.2 billion won to 900 million won, but just 29 days later, on September 1, it reverted the exemption back to 1.2 billion won.
It is not inherently problematic to modify policies. If unforeseen side effects arise after implementing a system, it is the government's responsibility to correct them. It is better to quickly address issues than to cling to policies that are disconnected from reality due to concerns about appearances. If market conditions change, policies may also need to change to some extent.
However, the issue lies in the frequency and speed of these adjustments. When regulations related to real estate taxes and transaction restrictions are changed just months after their announcement, market participants find it difficult to trust and act on government policies. When altering tax regulations, it is essential to consider how these changes will affect transaction restrictions and the rental market. Strengthening actual residence requirements should also take into account the potential issues for existing tenants and landlords. Adjusting policies only after problems arise in the field does not reflect a well-crafted approach.
Real estate policy should not be decided in isolation. The land transaction permission system, actual residence requirements, capital gains tax, comprehensive real estate tax, and rental systems are interconnected. If one side implements policies to increase supply while the other imposes restrictions on transactions, the effects of these policies may conflict. This is why the quality of policies is more important than their speed, and thorough checks should take precedence over announcements.
In fact, there are growing concerns in the market that the predictability of real estate policies may decline. Experts also emphasize the need to thoroughly review the effects and side effects before implementing policies. Above all, there is a warning against the practice of 'implementing first and fixing problems later' becoming the norm. Decisions about whether to buy or sell a home, renew a rental contract, or gift property to children are made based on government policies. If the perception spreads that tax or regulatory standards 'may change in a few months,' citizens will wait for the next policy change rather than making decisions based on current policies. This could lead to delayed transactions and increased market uncertainty.
The dynamics of the real estate market are influenced not only by the intensity of regulations but also by trust in government policies. Households and businesses need to believe that the standards announced today will remain stable for a considerable period to make long-term decisions. The success of real estate policy depends not on the quantity of policies introduced but on how precisely they are designed and consistently implemented. Sufficient consultation and simulation are necessary, and tax, loan, and transaction regulations should be examined as a cohesive system. While adjustments to fit market conditions are necessary, what is even more critical is thorough prior review. Policies directly related to citizens' assets must prioritize fundamentals, principles, and predictability.
* This article has been translated by AI.
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