Patch after patch exposes flaws in land permit system

The Democratic Party (DP) has proposed that the government extend until next year the application period for exemptions from the owner-occupancy requirement in land transaction permit zones. The government eased the rules once in May, but continuing side effects have prompted the ruling party to seek another fix just four months later.

Under its Oct. 15 housing measures introduced last year, the government designated all of Seoul and parts of Gyeonggi as land transaction permit zones. The unusually broad regulation was intended to effectively block “gap investment,” in which buyers purchase homes using tenants’ jeonse (lump-sum deposits).

Buyers in such zones must move into their homes within four months of receiving approval and live there for two years. The unprecedented restrictions brought significant side effects. Homes with existing tenants became difficult to sell, further suppressing transactions. Tenants, meanwhile, faced greater housing insecurity as the jeonse and monthly rental markets tightened.

In May, the government introduced a supplementary measure allowing people without homes who buy tenanted properties to postpone moving in until the existing lease expires. Applications were to be accepted through the end of the year.

The ruling party now proposes extending the application deadline through next year and allowing tenants to renew their leases. It argues that homeowners need more time to sell under the revised tax system while tenants need greater housing stability. If the government accepts the proposal, some buyers could have their owner-occupancy requirement postponed until as late as 2031.

The repeated patchwork reflects the excessive nature of the original regulation. The government pushed through an aggressive demand-suppression measure without sufficiently examining its likely side effects, only to increase confusion in the housing market.

The land transaction permit system is not the only example. Last month, the government included provisions in its tax reform plan that sharply increased the burden on owners of a single home they do not occupy. After a public backlash, it submitted revisions to the National Assembly. Now the ruling party is preparing to revise even those changes.

Repeated fixes, however, cannot solve the underlying problem. It is becoming increasingly clear that regulation and taxation alone cannot calm the simultaneous rise in home purchase prices, jeonse and monthly rents — a “triple surge” across the housing market.

The government and ruling party should work together to reconsider the basic direction of housing policy rather than continuing to patch rules that create new distortions each time they are amended and uncertainty for both owners and tenants alike.