Gov’t Mortgage Loan Oversight to Rise

New Towns developed in the future will have more apartments and higher buildings compared with existing new cities. Measures are also being promoted to lower the price of apartments by charging the government as well as purchasers the costs spent to equip the New Towns with road facilities.

Loaning money to purchase houses is expected to become a demanding job because the guidance and monitoring on the mortgage loans by financial companies will be intensified.

The government held a ministerial emergency meeting, superintended by Finance and Economy Minister Gwon Oh-gyu, on real estate policies at the Gwacheon Government Complex on November 3 and decided to promote such policies aimed at the stabilization of market. Accordingly the government will adjust upward the floor-area-ratio (the ratio of the total floor area of a building to the site) of public residential land and the building-to-land ratio to raise the density of development. Also, the government will speed up the supply of expected residential houses in order to expand the supply of apartments, and at the same time increase the supply of houses for lease or monthly rents by lifting regulations on multiplex houses and officetels and by lowering the charge.

In addition, the government plans to intensify its guidance and monitoring of mortgage loans by banks in order to stabilize the overheated real estate market. The Financial Supervisory Service implemented an emergency on-spot investigation on branches of banks where the amount of mortgage loans jumped rapidly.

Regarding such measures, specialists bought into the overall intention to expand the supply, but pointed out that paying the cost of infrastructure with the government budget could cause disputes over equity. Some also raised questions about the omission of easing the capital gain tax charges.

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