Growing No. of Foreigners Buying Property in Capital Area
Democratic Party of Korea lawmaker Jeon Yong-gi tabled an amendment to the Local Tax Act on Nov. 8 in order to block speculative real estate transactions by foreigners. According to the amendment, house purchase by a non-resident foreigner is subject to a tax rate of 30 percent plus the current real estate acquisition tax rate.
It has been pointed out by many that foreigners’ speculative transactions have led to an overall price increase in the South Korean real estate market. The lawmaker also said that an increasing number of foreigners are buying real estates in the capital and metropolitan areas. According to the Korea Appraisal Board, they bought 3,930 apartment units last year and 3,825 apartment units from January to August this year.
In the current law, foreigners are relatively freer than South Korean nationals from real estate taxes and loan regulations. Why the government does nothing about the reverse discrimination has been questioned by an increasing number of market participants.
“A large number of governments, including Singapore, Hong Kong, Canada, Australia and New Zealand, are trying to curb speculative transactions by non-resident foreigners with various taxes,” the lawmaker explained, adding, “Similar measures are urgently needed in South Korea.”