The Ministry of Strategy and Finance said Wednesday that it plans to increase the supply of public housing to tame the rising prices of jeonse apartments, and expand tax deductions on monthly rent payments.
The government also plans to further cut taxes and provide equity financing for apartment purchases as a means to revitalize the sluggish housing market.
Public real estate assets owned by the state-run Korea Land & Housing Corp. will be further expanded to build and offer jeonse apartments, which are rented by lump-sum deposits, for the middle class to stabilize the prices of those homes.
The Ministry of Land, Infrastructure and Transport and the Finance Ministry jointly said that they aim to supply some 700 jeonse apartments in the second half of next year, with a total of about 2,000 by the end of next year.
They will also increase tax deduction rates on monthly rent payments from 50 percent to 60 percent.
A revised tax bill, which will be proposed to the National Assembly next month, also includes further tax cuts to 3 percent, currently from 4 percent, for the acquisition of an apartment costing more than 900 million won.
Different purchasing tax rates will be applied accordingly to apartment prices to lessen the burden on low-income buyers.
Meanwhile, multiple homeowners will no longer have to pay heavy taxes on capital gains, a move meant to encourage them to put their assets up for sale and spur transactions in the market.
These follow-up measures from its earlier housing stimulus announced in April are part of efforts to turn the tide in the real estate market by encouraging those who can afford to buy homes to purchase one instead of looking for jeonse apartments.
Long-term, low-interest equity loans from state-run public housing funds will also be provided to mid-income families and newlyweds with an annual income of less than 70 million won.
They will be able to receive loans from Korea Housing Finance Corp. to fund the purchase of their first apartment.
The terms of the equity loans entail that both the government and the buyers share the profit after the buyers sell their apartments without having to worry about whether home prices will decline, as the borrowing system protects the apartments’ principal value from eroding, according to the Land Ministry.
By Park Hyong-ki (
hkp@heraldcorp.com)
