Foreigners to face tighter scrutiny in real estate deals

South Korea will step up checks on foreigners buying and selling homes here amid accusations that some of them deliberately evaded property taxes because of lax oversight, President-elect Yoon Suk-yeol’s transition committee said Thursday.

The team said once the Yoon government takes over on May 10, foreigners will have to report to authorities how many homes they have here, because multiple-home owners pay more taxes. Whether they have family members living with them here will be reported too, to calculate taxes.

Some foreigners were found to have falsified their data in order to pay less taxes. The oversight was believed to have led to an increase in foreign buying, which many say fueled the country’s already red-hot property market.

Between 2017 and 2021, a little over 66,000 real estate deals were made by foreigners, with an average of 13,000 purchases annually, according to Yoon’s People Power Party, which added that the deals made last year are five times that of 2010’s. Six out of 10 purchases last year were made by Chinese nationals.

The way foreigners make real estate deals has also prompted Koreans to call on regulators to review current mortgage rules.

The rules ban Koreans from using bank loans to buy high-priced homes, but foreigners have leveraged bank loans made in their home countries to make the purchase.

Some suggested forcing foreigners to get a license from the Korean government to make real estate deals, though the contentious proposal has yet to gain the parliament’s support.

To make that happen, the National Assembly would have to change the law. The change could invite retaliation from foreigners’ home countries.

By Choi Si-young (siyoungchoi@heraldcorp.com)