The government designated Dongtan-gu in Hwaseong, Giheung-gu in Yongin, and Guri in Gyeonggi Province as new regulated areas (adjustment target areas and speculative zones) today (June 30), leading to tightened regulations on loans, housing subscriptions, and taxes in these regions.

The designation as land transaction permit zones will also make gap investments, which involve purchasing property with existing Jeonse (long-term deposit rental) contracts, more difficult.

In current adjustment target areas and speculative zones, loan regulations are significantly stricter than those under the previous June 27 measures.

The Loan-to-Value (LTV) ratio has been tightened from 70% to 40% for those without homes (including those with one home who agree to sell it), while mortgage loans are completely prohibited for those who already own homes.

The mortgage loan limit is set at a maximum of 600 million won for properties valued at 1.5 billion won or less, 400 million won for those between 1.5 billion won and 2.5 billion won, and 200 million won for those exceeding 2.5 billion won.

Recently, newly built apartments near Dongtan Station with a dedicated area of 84 square meters have been trading between 2 billion and 2.2 billion won. For such complexes, the maximum loan amount is expected to be reduced to 400 million won.

Tax regulations will also be significantly strengthened.

In regulated areas, capital gains tax for multi-home owners will be subject to a surcharge of 20 percentage points for those with two homes and 30 percentage points for those with three or more, on top of the base tax rate (6% to 45%). Furthermore, long-term holding special deductions will be completely excluded.

For the capital gains tax exemption on a single-family home, a two-year residency requirement is now added to the existing two-year holding requirement.

Additionally, acquisition tax will be increased to 8% for those with two homes and 12% for those with three or more, and private rental housing will be excluded from the comprehensive real estate tax exemption.

For complexes pursuing redevelopment or reconstruction projects in areas like Guri, the effects of the speculative zone designation will take effect starting July 1. This prohibits the transfer of membership status after the establishment of an association for reconstruction projects and after the authorization of the management and disposal plan for redevelopment projects.

Housing subscription regulations will also change.

For complexes applying for tenant recruitment approval after the announcement date of the regulated area designation, the first-priority qualification requirements for national and private housing will be tightened to include those who have held a subscription savings account for at least two years and are heads of households. The application ratio for the point-based system will increase, and the restriction on re-subscription will be extended to a maximum of 10 years.

Gyeonggi Province designated Dongtan, Guri, and Giheung as land transaction permit zones today, with the designation taking effect five days after the announcement, on July 5.

Accordingly, buyers of homes within these land transaction permit zones are, in principle, required to move in within four months after obtaining government permission and must reside there for two years, effectively blocking gap investments.

However, as the government amended the enforcement decree of the Real Estate Transaction Reporting Act late last month to allow non-homeowners purchasing a house with an existing tenant to defer the residency requirement until the end of the current lease, a temporary window for gap investment is expected to remain open until the end of this year.

(Photo: Yonhap News)