Posted August. 30, 2010 11:12,
Those who have one or no homes can get housing loans from financial institutions regardless of income level through March next year if they buy homes outside of Seouls three most affluent districts of Gangnam, Seocho and Songpa.
A system under which those having more than two homes pay ordinary rates of real estate transfer tax (six to 35 percent) instead of heavy taxes when they sell their homes will be extended to the end of 2012. The system was due to expire at years end.
The government announced the measures Sunday as part of a plan to jump start housing transactions and stabilize housing for the working and middle class.
Land, Transport and Maritime Affairs Minister Chung Jong-hwan said, With housing transactions declining, people who have to move are in trouble. So to resolve this problem, the government has devised these measures, adding, Since these are temporary measures to continue through March next year, they will help stabilize housing prices and remove inconvenience for home buyers.
Banks will have the right to decide debt-to-income ratio rules on their own for people with one or no homes and who seek to buy one for under 900 million won (752,000 U.S. dollars) in an area outside of the Gangnam, Seocho and Songpa districts, where real estate speculation is rampant, by March next year.
This will effectively repeal the debt-to-income regulations that limit the loan amount according to the incomes of borrowers on a temporary basis excluding the three Seoul districts south of the Han River.
The government said about 94 percent of households in the capital area will benefit from this measure.
To prevent reckless provision of housing loans, however, loan-to-value ratios will remain the same. The loan ceilings based on the appraised value of a property are 40 percent for speculative areas, 50 percent for the Seoul metropolitan area, and 60 percent for remaining areas.
For instance, if a household whose combined annual income is 50 million won (41,800 dollars) or less purchases an apartment worth 900 million won in Seouls Yongsan district, it can borrow up to 450 million won (376,000 dollars) from banks. The loan limit used to be 290 million won (242,400 dollars) at most banks due to the debt-to-income restriction.
The relaxation of heavy transfer taxes slated to expire this year will be extended to the end of 2012. The extension will allow those who have multiple houses and land for non-business purposes to pay real estate transfer tax rates of six to 35 percent instead of 50-60 percent.
The halving of acquisition and registration taxes scheduled to expire at the end of the year will also be extended by another year.
Those who buy homes must pay the acquisition tax of two percent of the purchase price and the registration tax of one percent.