South Korean government tax reforms are increasing financial burdens on non-resident homeowners and rental business operators, triggering a decline in available rental listings.
These changes matter because they shift the housing market toward owner-occupancy, potentially forcing tenants to face higher costs or a lack of housing options as landlords pass tax burdens onto renters.
To transition the market toward actual residency, the government reduced tax benefits for high-priced homes and strengthened holding and capital gains taxes for non-residents and rental operators [2]. This policy shift has led to a visible contraction in the "jeonse" market, a unique Korean system of lump-sum deposits.
In Seoul's Gwanak District, the impact is evident in a large apartment complex of approximately 3,000 households [1]. For units with a dedicated area of 84 square meters, only seven jeonse listings were available [1]. This scarcity has driven prices upward, with jeonse deposits rising by approximately 50 million won over a six-month period [1].
Industry observers and tenants express growing concern that the tax burden will not be absorbed by property owners. Instead, there are fears that landlords will increase monthly rents to offset their new tax obligations.
"The tax burden for non-resident single-home owners or rental business operators is expected to be greater than before due to the government's real estate tax reform plan," a YTN news anchor said [2].
The shortage of available units combined with rising costs has heightened anxiety among renters who rely on stable, long-term leasing arrangements. "Jeonse listings are decreasing, and there are observations that landlords may pass on the tax burden by raising monthly rents," the anchor said [2].
“Jeonse listings are decreasing, and there are observations that landlords may pass on the tax burden by raising monthly rents.”
The South Korean government is attempting to curb real estate speculation by penalizing non-resident ownership and professional renting. However, the immediate result is a supply shock in the jeonse market. By making it more expensive to hold rental properties, the state may inadvertently trigger a transition toward monthly rent systems, which increases the monthly cost of living for the middle and lower classes.
