Will Tax and Jeonse DSR Be Introduced Simultaneously? Government Signals ‘Stronger Real Estate Measures’ [First National Assembly Audit under the Lee Administration]

[Financial News] On the 13th, Koo Yun-cheol, Deputy Prime Minister and Minister of Economy and Finance, stated that the third real estate policy package announced by the Lee Jae Myung administration will also clarify the direction of real estate taxation. Although President Lee Jae Myung pledged during his campaign not to control housing prices through taxes, the government has now openly suggested the possibility of including tax measures in the upcoming policy. This signals a shift from the previous stance of using taxes as a last resort to a more direct intervention, indicating that stronger measures are on the horizon.
During a National Assembly Strategy and Finance Committee audit, Koo Yun-cheol remarked, “We will soon announce policies related to demand, along with the direction of real estate taxation. While supply measures will continue at pace, we will also introduce policies to address demand.” Regarding President Lee’s campaign remarks, he explained, “This did not mean that tax policies would not be used, but rather that they would be considered a last resort.”
Previously, Kim Yong-beom, Chief Policy Officer at the Presidential Office, commented at a press briefing in August, “Some believe that since the government said it would not use the strongest measure—tax policy—now is the time to invest, but that is a misconception. The government will use all necessary tools.”
The fact that key government officials are signaling the possible use of tax measures is interpreted as a response to the continued rise in housing prices in parts of Seoul and Gyeonggi Province, despite two previous policy packages. In the market, there is speculation that stronger measures such as raising the property holding tax on high-priced or multiple homes, or reinstating heavier capital gains taxes, are under consideration.
The temporary suspension of heavier capital gains taxes for multiple home owners will automatically expire in May next year, bringing the tax back into effect. Strengthening acquisition taxes in overheated housing markets is also reportedly being reviewed.
However, with local elections approaching next year, it is likely that direct tax increases such as higher property holding tax rates will be excluded from this round of measures. There are concerns that increasing the tax burden without sufficient supply-side policies could fail to curb housing prices and only undermine the administration’s support base.
Another key aspect of the upcoming measures is the expansion of regulated areas and tighter financial regulations. The Financial Services Commission (FSC) has put forward proposals including: introducing the Debt Service Ratio (DSR) for jeonse and policy loans; expanding regulated areas, especially around the Han River Belt; reducing the DSR threshold from 40% to 35%; lowering the mortgage loan limit from 600 million won to 400 million won; and applying a 0% Loan-to-Value ratio (LTV) to high-priced homes.
An FSC official stated, “We are coordinating with other ministries, and depending on the outcome, the measures could become even stricter.”
Among the most effective lending regulations are the reduction of the DSR and the application of the DSR to policy loans. If the DSR is reduced by 5 percentage points, the loan limit for a borrower with an annual income of 100 million won would decrease by approximately 81 million won.
However, it remains uncertain how much these stronger lending regulations will suppress revived real estate sentiment. There are concerns that applying the DSR to jeonse or policy loans would only reduce loan limits for genuine homebuyers, potentially worsening polarization. As a result, a phased introduction is expected, such as excluding part of the principal from the DSR calculation for jeonse loans or initially applying the rule only to interest payments to ease the burden on tenants.
A financial industry official commented, “If the DSR is applied to jeonse loans for landlords, it would bring dramatic changes to the jeonse loan system. However, introducing the DSR for jeonse or policy loans is a matter of political judgment and does not appear to be an easy decision.”

spring@fnnews.com Lee Bo-mi, Park So-hyun Reporter