"We'll Lend You 1 Billion Won"... A Surprise Offer When Shopping for a Home in Gangnam

[Financial News] With the reinstatement of heavier capital gains tax on multiple-home owners just about a month away, a fire-sale listing has appeared in part of Gangnam offering a "10 billion won owner loan." As the mortgage cap for homes priced over 2.5 billion won has been cut to 200 million won, some properties listed for tens of billions of won have sat unsold for months, prompting drastic measures from sellers.
According to the real estate industry on the 6th, a unit in a large apartment complex in Gangnam, referred to as Complex A with more than 3,000 households, was recently listed with an offer of up to 1 billion won in private financing from the owner. Given that the home is priced around 5 billion won, the seller is effectively offering to personally lend about one-fifth of the purchase price. A nearby licensed real estate agent, identified as Mr. B, said, "This is practically the last window for multiple-home owners to put properties on the market," adding, "If your income is strong enough, it may be worth considering taking advantage of these terms."
Market watchers say this is a highly unusual case. A real estate industry official noted, "It is very rare for an individual seller to offer as much as 1 billion won in private financing," and explained, "It reflects the homeowner’s determination to sell by May 9."
The homeowner’s bold offer stems from the return of heavier capital gains taxation on multiple-home owners. Once the surcharge is reinstated on May 10, multiple-home owners selling residential properties in an Area Subject to Adjustment will have to pay tax at the basic rate plus an additional surcharge. In Seoul, the entire city is designated as an Area Subject to Adjustment, and owners of two homes in one household face an extra 20 percentage points, while those with three or more homes face an extra 30 percentage points. If they fail to sell within the grace period, the tax burden on multiple-home owners will rise sharply.
For now, however, such extreme cases appear limited to certain parts of Gangnam. Another licensed real estate agent near Gangnam, identified as Mr. C, said, "Most of the urgent listings that were going to come out have already hit the market, and now we are in a phase where properties are being pulled back," adding, "This kind of deal is only really possible in Gangnam because home prices are so high."
One remaining variable is a remark by President Lee Jae-myung. On this day, the president proposed, "We should keep the May 9 deadline for the reinstatement of heavier capital gains tax on multiple-home owners, but how about allowing a grace period for those who have at least filed an application under the land transaction permission system by then?" Depending on how this is implemented, a new wave of urgent sales could emerge in April. Currently, to qualify for the temporary suspension of the heavier tax, the sale contract must be completed by May 9, so the industry has effectively viewed the mid-April period as the deadline for filing applications under the land transaction permission system. In practice, results for such applications are usually issued around 15 business days after filing.
Meanwhile, as the end of the grace period for the heavier tax on multiple-home owners approaches, the number of apartment listings in Seoul has been declining. According to real estate platform Asil, as of this day there were 75,501 apartment listings in Seoul, down 5.7% from 80,080 on the 21st of last month. Jeonse rental listings stood at 15,195, the lowest level so far this year.
kjh0109@fnnews.com Reporter Kwon Jun-ho Reporter