"Sale of homes with tenants allowed until year-end; gap investing will remain difficult under lending rules"

\r\nThe government has decided to expand the temporary exemption from the move-in requirement in land transaction permit zones to include non-occupying one-home owners. It said the move was aimed at addressing fairness concerns among sellers, as the grace period had previously been limited to some multi-home owners. Still, the government stressed again that the move-in requirement and lending restrictions will remain in place, adding that "it is not allowing gap investing."
■ Grace period for move-in when selling homes with tenants
On the 12th, the Ministry of Land, Infrastructure and Transport announced that it will temporarily expand through the end of the year the scope of homes in land transaction permit zones for which a buyer's move-in can be deferred until the lease contract ends. As a result, all homes with tenants, including non-occupying one-home owners as well as existing multi-home owners, will be eligible for the grace period.
Under the current rules in permit zones, a buyer must move in within four months of purchasing a home and live there for two years. For multi-home owners, however, the government had allowed a delay in move-in to encourage listings ahead of heavier Capital Gains Tax burdens. As criticism over fairness grew, the policy has now been extended to all homes.
The grace period applies only to homes that were already being rented out as of the announcement on the 12th, and applications for land transaction permits must be submitted by Dec. 31 this year. Eligibility is also limited to people who have remained without a home continuously since the announcement. Those who sell an existing home after the announcement and become homeless are excluded. After the lease ends, the move-in obligation resumes, and residents must begin living there no later than May 11, 2028. Violations of the move-in requirement could result in an Enforcement Fine or even revocation of the permit.
■ Lending restrictions remain in place
The ministry also pushed back against concerns that allowing transactions for homes with jeonse tenants could effectively revive gap investing. It explained that even if such transactions are permitted, buyers would still need substantial cash to complete a purchase. Yoon Deok-gi, head of the Financial Policy Team at the FSC, said, "For example, if a 1.2 billion won home has a 700 million won jeonse deposit, the 40% LTV rule would apply, making a new mortgage virtually impossible." Lee Yu-ri, head of the Housing Policy Division at the Ministry of Land, Infrastructure and Transport, also said, "In practice, this is a structure in which end-users with sufficient capital buy the homes." On concerns about instability in the jeonse and monthly rental markets, she added that "as rental supply falls, tenant demand also declines," so there would be no major overall problem.
Meanwhile, some in the market voiced concerns about a decline in jeonse and monthly rental supply, as well as a possible concentration of listings in lower-priced homes. Nam Hyuk-woo of the Woori Bank Real Estate Research Institute said, "With non-occupying one-home owners now included, the pool of potential sellers has widened. But Capital Gains Tax burdens and lending restrictions still remain, so a sharp increase in listings in the short term is limited." He added, "In school districts and areas close to workplaces, rental listings may also decline as some owners move back in."
en1302@fnnews.com Jang In-seo Choi Ga-young Reporter