PPP lawmaker introduces two bills to ease jeonse market strain, cut first-home buying costs

People Power Party lawmaker Kim Sang-hoon announced Friday that he had introduced two bills — one to prevent a contraction in rental housing supply in the jeonse and monthly rent market, and another to ease the acquisition tax burden on first-time homebuyers.

According to the Korea Real Estate Board, Seoul apartment prices rose for 88 consecutive weeks through the second week of October, setting an all-time record for the longest uninterrupted streak. Seoul apartment jeonse prices climbed 0.80 percent in September, while monthly rent prices rose 0.93 percent.

In its August tax reform package, the government proposed raising the comprehensive real estate tax's fair market value ratio from the current 60 percent to 70 percent by 2027, while also phasing out tax benefits for purchase-type rental apartments in designated adjustment areas. The plan calls for the gradual reduction and eventual elimination of preferential treatment for such properties — including exemptions from the capital gains tax surcharge, enhanced long-term holding deductions, and exclusions from the corporate tax surcharge.

Under current rules, the 70 percent long-term holding special deduction rate applies only to privately built rental housing registered by the end of 2027 and rented out for at least 10 years before being sold. The benefit does not extend to privately purchased rental housing or to short-term private rental housing — a six-year category reintroduced by a legislative amendment at the end of 2024.

Kim's amendment addresses those gaps by establishing differentiated deduction rates based on rental housing type and rental period. The rate for privately built rental housing, which has the greatest effect on new supply, would rise from 70 percent to 80 percent. A new 70 percent rate would be created for privately purchased rental housing, and a 50 percent rate for short-term private rental housing with a six-year term. The registration deadline would also be extended from 2027 to 2031.

The bill also raises the acquisition-price threshold for the tax reduction from 1.2 billion won ($906,000) to 1.5 billion won, and extends the reduction period through 2031. The reduction ceiling would increase from 3 million won to 4 million won for small, low-priced, multi-unit and population-decline-area priority housing, and from 2 million won to 2.5 million won for other general housing. The combined reduction ceiling for joint acquisitions by two or more people would be raised accordingly.

"Home prices have been rising for the longest stretch on record, and jeonse and monthly rents are surging too, yet the government remains fixated on tightening real estate taxes," Kim said. "I will protect the supply of rental housing for tenants searching for jeonse and monthly rent units, and reduce the acquisition burden on first-time buyers who genuinely need a home."