Share of multi-home owners hits 8-year low as regulations tighten

The share of people who own two or more collective buildings nationwide has fallen to its lowest level in about eight years, data showed, as tightening mortgage regulations, the resumption of capital gains tax surcharges on multiple-home owners, and a proposed tax overhaul have deepened the preference for owning a single high-quality property.

According to the Court Registry Information Plaza on Sunday, the national multi-ownership index for collective buildings stood at 15.980 as of September — down 0.401 percentage points from 16.381 in December last year over nine months. The last time the index was in the 15-percent range was October 2018, when it recorded 15.95, making this an approximately eight-year low.

The multi-ownership index measures the proportion of registered owners who hold two or more collective buildings out of all such registered owners nationwide. The index covers not only apartments but also officetels and row and multi-family housing units.

The index peaked at 16.69 in August 2020 and has been on a long-term downward trend since. This year the decline has accelerated, pushing the figure below the 16-percent threshold. The sub-index for owners of exactly two properties — the largest share among multi-owners — also slipped to 11.057 in September, down 0.250 percentage points from 11.307 in December last year, extending a slide that began after it reached 11.357 in June last year.

Analysts point to the tightening of regulations on multiple-home owners under the Moon Jae-in administration as the main driver of the long-term decline. The government at the time moved to curb rising housing prices by imposing stricter rules across the entire cycle of acquiring, holding and disposing of properties.

In 2020, the government's June 17 measures effectively banned mortgage loans for residential and rental property businesses and tightened requirements for buyers using mortgages in regulated zones to sell existing homes and move into newly purchased ones.

The July 10 measures that followed sharply raised the tax burden on multiple-home owners. The top comprehensive real estate tax rate for owners of three or more homes and owners of two homes in adjustment-target zones was raised from 3.2 percent to 6.0 percent, while acquisition taxes were raised to a maximum of 8 percent for two-home owners and 12 percent for those with three or more. Surcharge rates on capital gains taxes for multiple-home owners were also increased, taking effect in June 2021.

The capital gains tax surcharge was, however, temporarily suspended when Yoon Suk Yeol took office in May 2022. The government at the time exempted multiple-home owners in adjustment-target zones from the surcharge, aiming to encourage them to put properties on the market by easing their tax burden. The suspension remained in place for roughly four years, through May 9 this year.

The regulatory stance targeting multiple-home owners has continued under the current government. Last year's June 27 lending restrictions effectively banned additional mortgage loans for multiple-home owners seeking to buy more properties in Greater Seoul and regulated zones. The October 15 measures that same year designated all of Seoul and parts of Gyeonggi Province as land transaction permit zones, while also expanding owner-occupancy requirements tied to home purchases.

In February this year, the government confirmed it would resume the capital gains tax surcharge on multiple-home owners, complicating the calculus around selling. A joint ministerial announcement on Feb. 12 confirmed the suspension in place since May 2022 would end on May 9. From May 10, owners of two homes in adjustment-target zones became subject to a surcharge of 20 percentage points on top of the basic tax rate, while those with three or more homes face an additional 30 percentage points.

A tax reform package announced Aug. 3 is also expected to reshape the holding strategies of multiple-home owners. The government plans to overhaul the comprehensive real estate tax system, shifting the basis of assessment from the number of homes owned to the total value of holdings and whether the owner actually lives in the property. The basic deduction for owner-occupants with a single home would rise from 1.2 billion won ($896,000) to 1.4 billion won, while the deduction for non-resident single-home owners would be cut to 900 million won. For multiple-home owners and other individuals, a base deduction of 400 million won would apply, with up to an additional 500 million won available depending on the share of owner-occupied property within their total holdings.

The tax reform package also includes a provision to temporarily ease the capital gains tax surcharge in 2027 and 2028 to encourage multiple-home owners to sell. The intent is to concentrate tax benefits on owner-occupants while giving multiple-home owners a window to dispose of properties. The key provisions of the reform are set to be applied in stages after going through the legislative process.

Some experts caution that a declining share of multiple-home owners does not necessarily translate into a more stable housing market. Ko Jun-seok, a professor at Yonsei University's Sangnam School of Management, said that as the number of multiple-home owners fell, the market saw a series of side effects — including a freeze in available listings, a shortage of jeonse properties, and sharp price increases in outlying areas. "Since a significant number of multiple-home owners who could no longer bear the carrying costs have already sold off properties, it will be difficult for the supply of listings from multiple-home owners to increase further unless incentives are put in place to encourage additional sales," Ko said.