The government on Tuesday laid out its key agenda items ahead of a series of public real estate policy forums, centering on deregulation of reconstruction and redevelopment projects, expanding the supply of non-apartment housing, adjusting mortgage regulations for end-users, and overhauling the comprehensive real estate tax system.

At a Cabinet meeting that day, related ministries jointly released a document outlining 21 major policy issues across three areas — housing supply, housing finance and real estate taxation.

President Lee Jae Myung chairs a Cabinet meeting at Cheong Wa Dae on Tuesday. [Yonhap]
President Lee Jae Myung chairs a Cabinet meeting at Cheong Wa Dae on Tuesday. [Yonhap]

The issues were released in step with a scheduled relay of public forums: the Ministry of Land, Infrastructure and Transport opened the first session Tuesday on housing supply, followed by the Financial Services Commission on Wednesday on housing finance and the Ministry of Economy and Finance on Thursday on real estate taxation. President Lee Jae Myung will then chair a comprehensive real estate policy forum on July 23.

On housing supply, the government identified deregulation to revitalize private redevelopment and reconstruction projects, use of idle urban land such as the Yongsan International Business District site, improvements to financial and tax regulations to boost new non-apartment housing supply, and greater flexibility in urban planning and building regulations as the main discussion topics.

The agenda also included the role of private rental housing providers, the appropriate share of public rental and public pre-sale housing, and dispersing residential demand by relocating Greater Seoul institutions to other regions. Also under consideration is a plan to exclude small-unit homes from multi-home ownership counts as a way to encourage individuals to supply rental housing.

In housing finance, the key issues put forward were adjusting mortgage regulations and expanding policy loans to support end-users such as youth buyers, the direction of jeonse loan regulations, and mortgage rules for relocation costs tied to redevelopment projects.

The debate will weigh the case for easing regulations to help end-users buy homes against maintaining current rules to prevent market overheating and speculative demand.

On real estate taxation, the agenda covered the policy goals and market impact of a tax overhaul, whether to differentiate the tax burden by region, whether to phase in changes, the appropriate level of property holding taxes, restructuring the comprehensive real estate tax system, and how to use revenue collected from the tax.

For the comprehensive real estate tax specifically, the discussion will address whether to base the levy on the number of homes owned or their value, and how to set tax thresholds for owner-occupiers versus non-residents and for ultra-high-priced properties.

On capital gains tax, the issues include revising the long-term holding deduction, whether to maintain the surcharge on multi-home owners, special tax treatment for elderly, long-term residents and those relocating to other regions, and whether to reduce capital gains tax if property holding taxes rise. On acquisition tax, the key questions are whether to cut the rate for ordinary and middle-class buyers and whether to reform the surcharge system for multi-home purchases.

Deputy Prime Minister Koo Yun-cheol, who also serves as minister of economy and finance, said the purpose of real estate taxation is not to use it as a tool to control home prices but to rationalize the tax system itself. "The aim is not to stabilize housing prices through taxation, but to operate the system in a way that corrects distortions and irrationalities in the real estate market," he said.

He added that a wide range of issues remain to be resolved — including the appropriate level of holding taxes, whether the comprehensive real estate tax should be based on the number of homes or their value, how to differentiate between owner-occupiers and non-residents, where to draw the line on ultra-high-priced properties, and how to deploy the tax revenue. "I believe we have included as many issues as possible, but we will reflect additional opinions if they are submitted," he said.


y2k@heraldcorp.com