[[B1]] Tension is building in Seoul’s rental market as the government tightens taxes and lending rules on non-occupied homes, targeting multiple-home owners and gap investors. The concern is that more landlords will push out tenants to move in themselves or sell off the homes they hold. With Seoul apartment jeonse listings already down 24% over two years, analysts warn that housing insecurity for tenants could deepen if a shift toward owner-occupancy gathers pace.
[[B2]] Among tenants whose leases are nearing expiration, anxiety is growing that they may have to vacate their homes as owners move to occupy them, according to real estate brokers on the 18th. An agent at a brokerage in Songpa-gu said, “In the past, not many owners wanted to move in themselves when a lease came up for renewal, but since the recent tax overhaul was announced, a considerable number have signaled they intend to live there themselves.” The head of a brokerage in Gangdong-gu said, “It’s not just tenants whose leases are about to end. Even tenants who felt secure, still within their contract term and not yet having used their renewal right, are increasingly asking, ‘Do I have to move out if the owner comes in?'” The agent added, “Just two years ago, small apartments had plenty of jeonse units in the 500 million to 600 million won range, but now most have risen by 200 million won each, and even those are hard to find.”
[[B3]] Behind this is the government’s decision to impose tax penalties on non-occupied homes and to squeeze lending. According to Seoul city data, of the 2,736,773 individually owned homes in Seoul as of 2024, some 830,928 — or 30.4% — are classified as “presumed non-occupied,” meaning the owner lives in a different district, city or province.
[[B4]] Private rental businesses were the first to feel the pressure. The government scrapped benefits such as the capital gains tax break it had offered to registered private rental operators, and decided to apply the exemption from heavier capital gains tax and the 50% special deduction for long-term holdings only if the property is sold by the end of next year or within one year after the mandatory rental period ends. According to data the Ministry of Land, Infrastructure and Transport submitted to the office of People Power Party lawmaker Kwon Young-jin, about 45,000 registered rental apartments in Seoul will complete their mandatory rental periods over three years — 24,267 units this year and 21,446 units in 2027 and 2028.
[[B5]] Holding taxes have also risen as the basic comprehensive real estate tax deduction for landlords owning three or more homes was cut from 900 million won to as little as 400 million won. Sung Chang-yeop, head of the Korea Association of Housing Lessors, said, “For a private rental operator, there is little incentive to keep the rental business going. Apartment rental operators have no choice but to push out tenants and sell, or move in themselves, while operators of multi-family and multi-unit housing face rising cost burdens, so they either raise rents or leave the market.”
[[B6]] The government’s “jeonse and monthly-rent safe trust,” introduced as a measure to prevent jeonse fraud, is also cited as a factor shrinking the rental market. Under the scheme, owners who deposit rental deposits with the Korea Housing & Urban Guarantee Corporation (HUG) receive an annual return of 4% to 5%. Lee Eun-hyung, a research fellow at the Construction and Economy Research Institute of Korea, said, “The safe trust locks up the deposit so the landlord cannot use it, which blunts the economic incentive to offer jeonse. Registered rental operators are likely to switch from jeonse to monthly rent altogether rather than deal with the complicated trust, so quality apartment jeonse will shrink further.”
[[B7]] Rules aimed at “non-occupying single-home owners” are also hastening the shift toward owner-occupancy. For single-home owners who do not live in the property, the basic comprehensive real estate tax deduction is being cut from 1.4 billion won to 900 million won, and the deduction rate for the non-occupied holding period under the capital gains long-term holding deduction has been lowered to 0%. Starting next January, single-home owners in the greater Seoul area or regulated zones who have no record of living in their home and who rent under jeonse elsewhere will in principle be barred from new jeonse loans and from extending the maturity of existing loans. Such non-occupying single-home jeonse borrowers are estimated at about 60,000 households.
[[B8]] Experts say the policy may be effective for stabilizing home prices over the medium to long term, but that the short-term shock could be considerable given how sharply the volume of rental units in Seoul is falling. According to the real estate platform Asil and MOLIT transaction data, Seoul apartment jeonse listings stood at 20,339 on the day, down 24% from 26,775 two years earlier, and more than 10,000 households of tenants who used their renewal right two years ago now must sign new contracts this year. The average jeonse price for a Seoul apartment stood at 622.27 million won as of June this year, up about 78 million won from 544.24 million won two years earlier, according to figures compiled by the Korea Real Estate Board.
[[B9]] Yoon Su-min, a real estate specialist at NH NongHyup Bank, said, “From 2027, the volume of new homes ready for occupancy will fall further, which points to a rental crunch, and yet the government’s rental measures amount to little more than telling people to buy or rent non-apartment housing because it will boost the construction supply of homes such as villas. Since the demand groups for apartment and non-apartment rentals are fundamentally different, this is likely to be no more than a stopgap.”
