As monthly rent burdens in Seoul soar to record highs, the South Korean government is confirmed to be reviewing Comprehensive Real Estate Tax relief as a means to expand corporate rental housing supply. The plan aims to shift the private rental structure—currently dominated by individual multi-homeowners—toward corporations and REITs to address the supply shortage in the jeonse and monthly rent markets.

According to government ministries on the 6th, the Ministry of Land, Infrastructure and Transport has been pursuing measures to provide tax benefits to corporations that purchase newly built homes and lease them for 20 years or longer. Options under review include allowing Comprehensive Real Estate Tax aggregation exclusions in designated adjustment zones, and raising the assessed value threshold for rental housing eligible for aggregation exclusion by 300 million won (approximately $220,000) in non-adjustment zones.

These moves come as Seoul’s rental housing supply has contracted sharply. According to Ministry of Land, Infrastructure and Transport rental housing statistics, new construction-type rental housing supply in Seoul fell from 21,115 units in 2021 to 3,976 units in 2024—an 81% decline in just three years. South Korea’s total rental housing stock has also remained stagnant at around 3.3 million units for the five years since 2020.

◆ Soaring monthly rents hit the 2030 generation hardest

The supply contraction has translated directly into price increases. According to Korea Real Estate Board statistics, Seoul’s multi-family housing monthly rent price index rose from 97.50 in January to 100.67 in July this year—a 3.25% increase over seven months. That is more than double the 1.49% increase recorded during the same period last year.

An analysis of Ministry of Land, Infrastructure and Transport actual transaction data by real estate platform Dabang found that in July, the average monthly rent for studio apartments of 33 square meters or less in Seoul’s multi-family housing segment was 690,000 won (approximately $510) based on a 10 million won (approximately $7,400) security deposit. In Gangnam-gu, where demand for live-near-work housing is concentrated, the average reached 970,000 won (approximately $720)—41% higher than the Seoul-wide average. Once maintenance fees and utilities are added, actual monthly housing expenditures exceed 1 million won (approximately $740).

The impact is particularly severe for young people with weaker income foundations. In the first quarter of this year, the average monthly nominal income for household heads aged 39 or younger was 5,390,500 won (approximately $4,000), down 1.7% year-over-year—the only age group to see a decline. Over the same period, their actual housing expenditure rose 11.6%.

Notably, the relatively affordable northern Seoul districts saw larger increases than the southern districts. On a cumulative basis from January through July, northern Seoul rose 3.73% while southern Seoul rose 2.81%. Analysts note that as monthly rent burdens grow faster in areas previously considered affordable, the bottom rungs of the housing ladder are being shaken.

◆ Comprehensive Real Estate Tax relief: the key incentive for corporate rental housing

The Comprehensive Real Estate Tax aggregation exclusion under government review is considered a critical factor determining the viability of corporate rental housing. Corporate rental models involve holding dozens to hundreds of units over long periods and generating returns through rent, meaning annual property holding taxes directly affect profitability. Expanding the aggregation exclusion would lower the tax burden associated with long-term holding, potentially lowering the barrier to market entry for corporations.

A Ministry of Land, Infrastructure and Transport official explained: “The intent is to open a path for private rental developers who build housing to participate as players in the housing market and stimulate supply.”

The government envisions restructuring the private rental market—long led by individual multi-homeowners—into a system where public entities and corporations supply housing together. This stems from the assessment that the non-institutional private rental market carries market instability factors including jeonse fraud, involuntary evictions, and sharp jeonse price spikes.

At a seminar titled “Measures to Promote Immediately Supplyable Semi-Permanent Private Rental Housing for Jeonse and Monthly Rent Stability” held on the 21st of last month, Democratic Party lawmaker Ahn Do-geol emphasized the need for special legislation, stating: “When conditions align across Comprehensive Real Estate Tax and other tax measures, financial support, and land supply issues, a private rental housing business model that tenants can afford without capital gains will emerge.”

◆ Industry: “Tax benefits alone are not enough”

Industry voices, however, point out that Comprehensive Real Estate Tax relief alone is insufficient to secure the viability of corporate rental housing. In Seoul, where land prices are high, even eliminating the Comprehensive Real Estate Tax burden would still make it difficult to cover project and financing costs through rental income alone. The REIT and asset management industry’s response has been that “tax benefits are a necessary condition, not a sufficient one.”

There are also calls to define corporate rental operators as a distinct policy category and establish a corresponding framework of tax, financial, and housing policies. Cho Kang-tae, CEO of Mangrove operator MGRV, said: “We need to clearly define corporate long-term rental housing and simultaneously stipulate the obligations corporations must bear, such as long-term lease commitments, so that acquisition, holding, operation, sale, and reinvestment function as a single cycle.”

◆ Youth housing support measures pursued in parallel

The government is also pursuing separate measures to ease the housing burden on young people. Alongside relaxing monthly rent support requirements and promoting the creation of “universal youth public rental housing” supplied in larger floor plans near transit hubs, the government has decided to introduce public sale models including equity-accumulation and profit-sharing schemes.

A “Youth Future Bogeumjari Loan” will also be launched, offering preferential interest rates for first-time buyers purchasing non-apartment housing priced at 400 million won (approximately $300,000) or below. However, some note that given the characteristics of non-apartment housing—lower liquidity and weaker expectations for asset appreciation—purchase preference is low, and the policy’s effectiveness may be limited.

Shin Bo-yeon, professor in the Department of Real Estate AI Convergence at Sejong University, said: “Non-apartment housing is perceived not as a purchase target but as a transitional housing form, so even incentivizing purchases is unlikely to translate into actual demand. Equity-accumulation sales, where prices are set at construction cost levels and ownership is acquired in stages, would likely be more popular.”

Ham Young-jin, head of Woori Bank’s Real Estate Research Lab, suggested: “Consideration should also be given to appropriate pricing policies that young people can accept, such as differentiated rent based on individual income levels.”