Lee signals tighter lending for multihome owners

President Lee Jae-myung on Feb. 13 questioned the fairness of granting additional loan extensions to multi-homeowners who have continued to hold multiple properties despite years of tax incentives, including reductions in capital gains taxes.

“Is it fair to offer further loan extensions to multi-homeowners who were given opportunities for years, including cuts to capital gains taxes, yet chose not to reduce their holdings?” Lee said, underscoring the need to tighten lending standards for owners of multiple homes. The government later announced that it would introduce measures after the Lunar New Year holiday to limit loan extensions for such borrowers.

At 12:02 a.m., Lee posted on social media, writing, “Like all areas of administration, finance must also be just and fair.” He added that even in pursuing the national objective of stabilizing home prices, extending financial benefits for the purchase of multiple properties for investment or speculative purposes, rather than for owner occupancy, raises fundamental concerns.

Concerns over equity have continued to shadow the property market. Under the government’s June 27 real estate lending measures, mortgage loans for multi-homeowners were restricted in the Seoul metropolitan area and other designated zones. Yet borrowers who had already secured loans were allowed to extend them without additional constraints. A similar exemption applied to new loans for registered rental housing operators, even though such lending was fully suspended under the Sept. 7 measures.

Later that afternoon, the Financial Services Commission met with financial industry officials at the government complex and signaled further lending curbs targeting multi-homeowners. Financial authorities are now expected to effectively halt loan extensions for these borrowers after the Lunar New Year holiday. Analysts say the new restrictions will likely focus on rental business operators who take out large lump-sum loans secured by housing and repay the principal in a single payment at maturity.

Observers say the administration’s pressure on multi-homeowners is expanding on multiple fronts, ranging from the rollback of tax benefits to tighter financial regulation. Lee has already made clear that the suspension of heavy capital gains tax surcharges will end and has called for scaling back tax incentives for registered rental housing businesses. By moving to limit loan extensions, the government appears to be stepping up efforts to push multi-homeowners to sell.

In a follow-up social media post at 9:05 a.m., Lee wrote that if multi-homeowners forgo this favorable opportunity for capital gains tax reductions and succeed by holding out, it would signify the failure of the government’s real estate policy aimed at curbing ruinous property speculation.


Hoon-Sang Park tigermask@donga.com