South Korea provides rental-related loans to tenants and tax incentives to landlords

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South Korea provides rental-related loans to tenants and tax incentives to landlords

Apartment complexes, housing and commercial units surrounding the new presidential office in Yongsan, central Seoul, are seen from Namsan on May 31. (Yonhap)

The government pledged on Tuesday to ease loan regulations for “jeonse” house rentals and increase tax deduction rates for monthly rental contractors to help ease financial burdens on tenants and stabilize the housing market.

As part of the Yoon Suk-yeol administration’s first package of property market measures, the government also pledged to reform the presale price cap system imposed on private apartments and provide tax relief. landlords selling their home after long-term leases in a move. to expand the supply of housing.

The Yoon government has promised an overhaul of housing policy, saying the previous government’s pursuit of stricter regulations and higher taxes to curb speculation has instead caused house prices to soar.

In detail, the government has decided to grant tax incentives to landlords who voluntarily increase rents by less than 5%, according to the Ministry of Finance.

Up to 180 million won ($139,211) in loans will be available for those who need to enter into a new “jeonse” contract within a year of their four-year contracts expiring. Currently, the maximum amount is 120 million won.

Under South Korea’s decades-old jeonse system, tenants pay the landlord a large lump sum deposit, known as a coin purse, which is then returned at the end of the tenancy agreement, which lasts usually two years. During the term of the lease, tenants do not pay monthly rent.

The government will also increase the tax deduction rate for monthly rents to a maximum of 15% from the current 12%.

The income tax deduction limit for rental loan repayment will also be extended from 3 million won to 4 million won.

The government has pledged to come up with a detailed roadmap to deliver more than 2.5 million units of new homes by mid-August, within 100 days of the launch of the new administration.

A global plan aimed at better supporting young people and middle-class households in their property purchases will also be drawn up during the year.

“While near-term risks remain in the leasing market, the government is seeking to provide preemptive responses by expanding tax and financial benefits and increasing supply,” Finance Minister Choo Kyung-ho said. , chairing a real estate meeting. ministers. (Yonhap)

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