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DP adopts policy to lessen real estate tax burdens amid spiking house prices

All News 17:06 May 27, 2021

SEOUL, May 27 (Yonhap) -- The ruling Democratic Party (DP) on Thursday adopted a set of policies aimed at relieving real estate tax burdens and increasing home supply amid continuing house price hikes.

Rep. Kim Jin-pyo, the chair of the DP's special real estate committee, announced the policies after getting the endorsement from party members at a meeting of its incumbent lawmakers earlier in the day.

The DP has been under pressure to address growing public discontent over the overheated real estate market after runaway house prices drove up tax burdens on home owners while raising costs for home lenders. The housing market issue has been widely blamed as a major reason for the DP's crushing defeats in the latest Seoul and Busan mayoral elections.

Under the tentative plans, the benefit of the 0.05-percentage-point property tax cut, currently available for houses worth 600 million won (US$537,393) or less, will be extended to houses worth up to 900 million won.

According to the DP, some 440,000 houses nationwide are estimated to benefit from the tax cut, estimated at about 180,000 won on average per house.

The DP also decided to preferentially allow modest income families and home buyers in need of housing to borrow up to 20 percentage points more in the loan-to-value ratio than currently permitted.

On the house supply front, the DP will seek to distribute some 10,000 units of housing to young people and newlyweds in areas designated by regional governments. A home remodeling project will also be activated in suburban towns, like Seongnam, south of Seoul and Goyang, northwest of Seoul.

State-owned military airports, as well as sites for reservoirs or correctional institutions, will also be explored as potential candidates to house long-term state home supply projects, the party said.

The plenary party meeting, however, fell short of reaching an agreement on the controversial issue of whether or not to cut the Gross Real Estate Tax that primarily multiplies property taxes on owners of a home worth 900 million won or more.

The party committee under the new leadership of party chief Rep. Song Young-gil had pushed to raise the taxation standard to 1.2 billion won, but the plan ran into strong resistance from hardline party members denouncing it as "tax cuts for the rich."

Committee chairman Kim said, "in the party meeting, (the DP) decided to retain (the taxation standard of) the Gross Real Estate Tax as well as the (home) transfer tax after holding a public hearing and having consultations with the government and related experts, or to come up with alternative proposals (on the issues) in June."

The DP plans to announce its finalized plans early next week after holding a high-level consultation meeting with government officials on Sunday.

Rep. Yun Ho-hung, floor leader of the Democratic Party, speaks during a plenary meeting of lawmakers in Seoul on May 27, 2021. (Yonhap)

Rep. Yun Ho-hung, floor leader of the Democratic Party, speaks during a plenary meeting of lawmakers in Seoul on May 27, 2021. (Yonhap)


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