'Exclusion from heavier tax is fair reward for fulfilling obligations'

'Retroactive regulation undermines trust in policy'

A residential neighborhood of villas and multi-family homes in Hwagok-dong, Gangseo-gu, Seoul. [Yonhap]
A residential neighborhood of villas and multi-family homes in Hwagok-dong, Gangseo-gu, Seoul. [Yonhap]

Industry groups have criticized National Tax Service Commissioner Lim Gwang-hyeon's recent call to revise the capital gains tax exclusion for registered rental apartments to push more units onto the market, warning the move "would undermine residential stability for tenants."

The Korea Rental Housing Landlords Association said Thursday that "removing registered rental housing — supplied at roughly half the market rent — from the market is no different from eliminating tens of thousands of public rental units."

Commissioner Lim had posted on his X (formerly Twitter) account on June 21 that it would be beneficial if roughly 68,000 Seoul apartments — combining units already deregistered and those set to be deregistered — could be released onto the market, and called for reducing tax benefits for registered rental apartment operators.

In response, the association said the tax exemptions, including the exclusion from the heavier capital gains tax rate, "are not a simple privilege but fair compensation for faithfully fulfilling 21 obligations aimed at housing stability" — among them mandatory rental periods, caps on rent increases, lease contract reporting, and rental deposit insurance enrollment — and said those benefits must not be changed.

The association added: "If the government repeatedly changes and retroactively applies penalties to a system it promised when landlords registered, how can any citizen trust state policy? Retroactive regulation fundamentally undermines trust in policy."

Average rents for registered rental housing in Seoul in 2024 — based on an analysis conducted in March — stood at 54.7 percent of the market rate for monthly rent and 53.0 percent for jeonse, roughly half the going rate compared with ordinary private rental housing.

Korea Rental Housing Landlords Association President Seong Chang-yeop said "pushing through retroactive regulation of the registered rental system for the sake of some stabilizing effect on the sales market is tantamount to destabilizing the lease market that half the population depends on."

He added that "the government should not focus solely on the short-term effect of expanding supply, but should approach the issue carefully from a long-term perspective — one that considers policy credibility, tenant protection, and the sustained supply of rental housing," and said "the government must back this up with a stable lease market policy so that citizens can trust and wait for its housing supply plans."


lucky@heraldcorp.com