Housing industry experts proposed easing loan-to-value (LTV) regulations and restoring tax benefits for rental business operators at a Ministry of Land, Infrastructure and Transport housing supply forum held on the 14th at Jeongdong 1928 Art Center in Jung-gu. Kim Deok-rye, senior researcher at the Housing Industry Research Institute, and Kang Kyung-hoon, CEO of Jingkyung Construction, called for LTV relief for non-apartment housing developers currently restricted by 0% LTV for rental operators and 40% LTV for non-apartments in regulated zones. Seo Mi-sook, director at Yonhap News, advocated reinstating tax incentives eliminated in the September 13, 2018 measures. The proposals aim to revive non-apartment housing supply, which has contracted under regulatory tightening including the post-9.7 measures that set rental operator LTV at 0% and building code restrictions dating from 1990.
Experts Propose LTV Relaxation for Non-Apartment Developers
Kim Deok-rye stated that "to normalize non-apartment housing, the future uncertainty inherent in non-apartment projects must be removed" and emphasized that "LTV has been reduced as areas are designated as regulated zones, restricting loans. This part needs to be resolved." Following the 9.7 measures, LTV for housing sales and rental business operators was regulated at 0%, forcing developers to convert properties to commercial use before final payment or use savings banks after demolition.
Kang Kyung-hoon said, "I hope LTV will be eased for new construction sellers," adding that "applying 40% LTV to non-apartments in regulated areas is harsh and needs to be relaxed."
Kim Deok-rye Calls for Building Code Reform
Kim Deok-rye noted that "the building standards for multi-family and row houses were created in 1990 and are still applied today," pointing out that "they limit buildings to four floors or less and 66 square meters or less in total floor area, but now buildings of 20 floors or more are frequently constructed, so the floor limit for multi-family and row houses is excessive." She added that "citizens who feel residential anxiety about non-apartments will be able to live in good-quality housing."
![Kim Deok-rye, senior researcher at the Housing Industry Research Institute]()
Kim Deok-rye, senior researcher at the Housing Industry Research Institute [Source: KTV video capture]
Seo Mi-sook Advocates Tax Benefit Restoration for Rental Operators
Seo Mi-sook stated that "tax benefits for rental business operators were greatly reduced in the September 13, 2018 measures" and suggested that "by providing tax benefits to rental business operators, non-apartment supply can be achieved, and rental business operators can be used as a channel." She explained that in the case of multi-family villas, they are not products that bring capital gains, making it difficult for general buyers to purchase them, and buyers face loan restrictions if they move to an apartment after buying a villa.
Seo distinguished corporate rental housing from affordable villas, saying, "Corporate rental is being expanded, and while it is correct from a methodological perspective of diversifying rental housing supply entities, corporate rental is not affordable villas," predicting that "(corporate rental) will replace apartment jeonse or high-priced housing."
![Seo Mi-sook, director at Yonhap News]()
Seo Mi-sook, director at Yonhap News [Source: KTV video capture]
FAQ
What LTV regulations were proposed for non-apartment housing developers at the forum on the 14th?
Kim Deok-rye and Kang Kyung-hoon proposed easing LTV restrictions for non-apartment developers. Current regulations include 0% LTV for rental business operators (imposed after the 9.7 measures) and 40% LTV for non-apartments in regulated zones. Kang specifically called for LTV relaxation for new construction sellers.
What tax benefit restoration did Seo Mi-sook advocate at the forum?
Seo Mi-sook advocated reinstating tax incentives for rental business operators that were eliminated in the September 13, 2018 measures. She proposed using tax benefits to encourage rental operators to supply non-apartment housing, noting that multi-family villas are difficult for general buyers to purchase due to lack of capital gains and loan restrictions.
