Grand National Party Announces Real Estate Countermeasures

The Grand National Party will expand the ban on the resale of new apartment ownership rights from speculation-heavy areas to the rest of the country, and pursue a “build first, sell after” system for the construction of public sector apartments to go into effect in 2006.

In addition, the comprehensive real estate tax, which has thus far been levied according to individuals and categories, will be levied per household, and a heavier transfer income tax will be imposed on single households with two or more residences.

The Grand National Party’s Special Committee on Real Estate Measures held a general meeting on July 20, at which it announced 15 proposals across five areas of real estate policy, including the abovementioned changes.

As part of its attempt to prevent housing speculation, the special committee proposed the taxation of the comprehensive real estate tax by household unit, heavier taxation for single households owning two or more residences (heretofore applied to households with three or more residences), and the mandatory registration and online disclosure of actual transaction prices.

According to the proposal, the criterion for residential mortgage loans will also be strengthened, from per individual to per household.

To boost the housing supply, the committee recommended the construction of additional new towns and an increase in mid- to large-sized apartment units (proportion of lot devoted to units measuring 25.7 pyong or larger: 40 percent→50 percent), the implementation of publicly-managed housing developments beginning with the Pangyo area, and the legislation of a special act to support the vitalization of new towns.

Also, to stabilize the housing situation for the working classes, it proposed the trial formation of a “rental town” and the improvement of the environment around rental housing complexes.

The issue of disclosing the cost of real estate sales in the civilian sector, which had floundered due to the opposition of Representative Park Geun-hye, was finally calibrated to the “disclosure of housing lot-related costs only in cases where civilians participate in the development of public housing developments.” Disclosure for real estate sales costs in the public sector will be mandatory, as initially proposed.

The “sale post-construction” system, intended to improve the sale system for new apartments, will be first instituted in the public sector. For privately-owned construction companies, the system will be established in 2010 through incentives such as priority rights to public housing land.

Regarding institution of the concept of public land ownership, which sparked fierce conflict among committee members, the special committee stated that it “agreed to the introduction of related systems provided that they are constitutional.”

On the basis of this decision, development-derived profits for areas surrounding housing developments will be redeemed as infrastructure fees, while the transfer income tax exemption on the exchange of agricultural land will be lifted. The exemption had applied to those who have been farming for more than three years but less than eight, who purchased replacement agricultural land using compensation funds received when their original land was expropriated.

The contents announced by the special committee on this day are likely to be confirmed as the official party platform.

Jung-Eun Lee lightee@donga.com