The South Korean government is implementing a real-estate tax reform that increases the tax burden on non-resident one-house owners and rental-business operators [1].
This shift aims to re-orient the housing market toward owner-occupied residence and curb speculative leasing [1]. However, the policy risks reducing the supply of jeonse, Korea's unique lump-sum deposit rental system, which could force landlords to pass higher tax costs to tenants [1, 2].
Market indicators in Seoul already suggest a tightening supply. In a large apartment complex located in Gwanak-gu, only seven jeonse units are currently listed for the 3,000-unit development [1]. This scarcity is coinciding with rising costs for renters in the area.
Data from the same Gwanak-gu complex shows that the average jeonse deposit for an 84-square-meter unit rose by approximately 50 million won over the past six months [1]. The surge in deposits reflects a growing imbalance between the available rental inventory and tenant demand.
Government officials said the reform is intended to discourage those who hold property solely for investment purposes [1]. By making it more expensive for non-residents to own homes, the state hopes to stabilize the market for actual residents.
Despite these goals, tenants said the policy will backfire by shrinking the rental pool. If rental-business operators exit the market due to higher taxes, the resulting shortage of available units may drive prices even higher, further straining the financial stability of renters [1, 2].
“Only seven jeonse units are currently listed for the 3,000-unit apartment complex in Gwanak-gu.”
The reform represents a strategic attempt by the South Korean government to dismantle speculative real estate bubbles by penalizing non-resident ownership. However, because the jeonse system relies on a steady supply of landlord capital, increasing the tax burden on these providers may inadvertently accelerate the transition toward monthly rent models or simply inflate the cost of existing deposits, potentially displacing lower-income renters.
