June 27, 2022

The South Korean government in an attempt to prevent cross-border flows of illegal funds and crack down on dubious deals has announced to monitor foreigners’ real estate transactions carefully.

The country’s Finance Minister Hong Nam-ki has unveiled a set of measures by the government itself that will be used to prevent foreigners from illegally buying real estate. The move comes as some non-residents are found to have taken undue profits from property transactions.

Government measures on real-estate check –

• The Bank of Korea (BOK) and the Korea Customs Service to monitor any illegal money flows will set up an information-sharing system by March next year.
• The central bank will also collect information about foreigners’ purchases of real estate and deliver it to the state customs agency.
• The government will also not authorize foreigners to engage in the property rental business who came to the country to study or with short-term stay visas.

According to the Korea Real Estate Board, the number of property transactions by foreigners in the January-September period came to 16,405, up from 15,727 reported for all of 2020.

The government for Korean nationals has imposed heavier regulations on real estate deals, such as tighter rules on home-backed loans and tax hikes. However, the foreigners have been mostly unaffected by such regulations due to negligent supervision.

According to Hong, the government amid growing public discontent ahead of the presidential election is considering relaxing taxes on real estate possession for middle class people who own one home next year.

However, he also did make it clear that the country has no plan to delay the heavier taxation on capital gains from property sales for owners of multiple homes.

The government in June in some designated areas had imposed heavier property tax burdens on such owners as it sharply increased the capital gains tax rate on home sales for such people after a one-year grace period.

The government to curb housing prices has unveiled a set of measures, such as tax hikes and tighter lending rules. However, public discontent about the housing policy has mounted amid growing tax burdens.