Opposition Party Says, "If You Don't Own a Home, You Face a Jeonse and Rent Bomb; If You Do, You Face a Tax Bomb"

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\r\n[The Financial News] The People Power Party criticized the Lee Jae-myung administration on the 12th, saying that people without homes are suffering from a jeonse and rent crunch, while homeowners are facing a sharp rise in tax burdens because of its real estate policy.
Song Eon-seok, the party's floor leader, held a floor strategy meeting at the National Assembly of the Republic of Korea that day and pointed to the rising apartment prices across the Seoul metropolitan area after the reinstatement of heavier capital gains tax on apartment sales in Seoul. He said, "The result is a tax bomb for people who don't own a home, a tax bomb for those who do, and a regulatory bomb for end users."
Song said that once the market began to freeze after the heavier capital gains tax took effect, the government, in a hurry, even brought out exemptions to the Land Transaction Permit System for Non-Resident Single-Home Owners. "But for multi-home owners, gifts are increasing more than sales, and the share of gap investment in apartments in Seoul averages 30% in Gangnam, Seocho District and Songpa District," he said. "The idea that preferred listings would suddenly come onto the market was unrealistic from the start."
Kim Eun-hye, the senior deputy floor leader for policy, cited President Lee Jae-myung's past criticism in 2021, when he said people would wait for a change of government rather than sell after the heavier capital gains tax was introduced. "But now that he is president, he has changed his words. As he predicted, listings have disappeared, jeonse listings have dried up, and monthly rents are up as much as 35%," she said. "Killing the market while knowing the consequences is not policy failure. It is hypocrisy."
Kim also warned, "When the escape route is blocked by heavier capital gains tax and people are left with nowhere to go, a holding tax bomb will fall as soon as the June local elections are over. Didn't President Lee publicly say he would also cut the long-term holding special deduction for single-home owners, the last refuge for retirees?" She added, "They are not pursuing private-sector supply. Instead, they seem intent on seizing people's homes through a drive-and-corner tactic to meet quotas."
The government and the ruling party have recently signaled plans to raise holding taxes, including property tax and the comprehensive real estate holding tax, and to revise the long-term holding special deduction by excluding the holding period from the criteria. With the tax reform plan due in July, many expect a real estate tax increase after the local elections.
The People Power Party said the only solution to the housing problem is supply. As local election pledges, it proposed easing restrictions on the transfer of association membership rights in urban improvement projects, abolishing the Excess Profit Reclamation System to speed up redevelopment and reconstruction, and expanding the supply of half-price jeonse housing in the Seoul metropolitan area. Oh Se-hoon, the party's candidate for Seoul Metropolitan City Mayor, promised to simplify procedures by skipping the formation of a redevelopment promotion committee and processing project implementation and management and disposal plan approvals together.
However, the ruling Democratic Party of Korea (DPK) has also promised to expand supply. Jeong Won-oh, the DPK candidate for Seoul Metropolitan City Mayor, said he would shorten redevelopment procedures by revising the Act on the Improvement of Urban Areas and Residential Environments. The plan would push ahead with the designation of basic plans and maintenance zones at the same time, and allow project implementation plan approval and approval of the management and disposal plan to be handled in one step.
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uknow@fnnews.com Kim Yun-ho Reporter