▲ An apartment complex in Seoul
The grace period for the actual residency obligation applied when homeless homebuyers purchase houses with existing tenants in land transaction permission zones will be extended until the end of next year.
The recognized grace period will also be expanded from the current lease contract to the renewed contract period.
The Ministry of Land, Infrastructure and Transport announced on September 17 that the application deadline for the actual residency grace period announced last May will be extended by one year from the original December 31 of this year to December 31 of next year.
Previously, ahead of the expiration of the heavier capital gains tax on multi-homeowners on May 9 this year, the government announced a plan last February to temporarily defer the actual residency obligation within land transaction permission zones until the end of the initial lease term, limited to cases where there is a tenant and the buyer is homeless, to support the swift sale of homes by multi-homeowners.
Following the expiration of the heavy capital gains tax in May, the application scope of the measure was expanded to all houses, including non-owner-occupied single homes, allowing buyers who apply for land transaction permission by the end of this year to receive a grace period for actual residency until the end of their contracts.
This additional extension is a follow-up measure stemming from the inclusion of short-term home sales inducement measures in the August 3 tax reform plan, such as the temporary easing of capital gains tax for multi-homeowners and the phased abolition of tax benefits for purchased rental apartments in regulated areas.
Earlier, during a senior party officials' meeting on September 15, the ruling party also suggested to the government that an additional extension was necessary, citing the fact that those attempting to sell houses next year under the tax reform plan would be unable to apply for the actual residency grace period.
The government plans to issue a legislative notice for the amendment to the Real Estate Transaction Reporting Act containing these details on September 18 and enforce it on October 1 of next month.
It will apply for a 15-month period until the end of next year to all leased properties as of the enforcement date of October 1.
Just like the existing measures, registration of housing acquisition must be completed within four months after land transactions are permitted.
Considering that transactions of purchased rental apartments (registered rental housing) in regulated areas may be restricted depending on the circumstances, the actual residency grace period can be postponed from the perspective of equity.
All of Seoul and 15 regions in Gyeonggi Province currently bound as land transaction permission zones have been designated as regulated areas.
Consequently, transactions for purchased rental apartments are restricted if their mandatory rental period remains.
As these areas are also designated as overheated speculative districts, the transfer of union member status is restricted from the point of union establishment authorization for reconstruction and management disposal plan authorization for redevelopment until the date of previous notice, preventing transactions.
Therefore, if the application of tax benefits resulting from the sale of purchased rental apartments is postponed until after the end of the mandatory rental period or the date of the previous notice, the application for the actual residency grace period will also be adjusted to be available for 15 months from that point.
The recognized scope of the actual residency grace period will also be expanded from the remaining lease period of the existing contract to the renewed contract period.
The purpose is to enhance the housing stability of tenants by recognizing the additional contract period if there is a tenant wishing to continue living in their current home utilizing a renewal contract.
Renewal contracts are limited to one time for a maximum of two years.
Accordingly, based on the enforcement date (October 1), a 15-month application period plus a 24-month renewal contract allows residency to be deferred for up to three years and three months.
If there is no renewal contract, moving in is deferred until the initial expiration date of the lease contract at the time of enforcement (up to two years), requiring residents to finish moving in by September 30, 2028.
The requirement for homeless homebuyers is limited to "individuals who have maintained homelessness continuously since May 12 of this year," consistent with the measure announced last May.
Residents are required to live in the property for two years after moving in.
Kim I-tak, First Vice Minister of Land, Infrastructure and Transport, stated, "This measure aims to maintain the actual residency principle of the land transaction permission system while alleviating practical difficulties arising in the process of trading leased homes and enhancing tenant housing stability," adding, "By maintaining the homeless actual homebuyer requirements and the two-year residency obligation as they are, we will ensure that transactions are centered around actual demand while thoroughly blocking speculative demand."
(Photo: Yonhap News)
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