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🇰🇷 South Korea /Elections & Politics

President Lee Calls for Tighter Jeonse Loan Curbs to Prevent Housing Price Surge

From Hankyoreh · () Korean

Translated from Korean, summarized and contextualized by DistantNews.

At a glance

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  • South Korean President Lee Jae-myung called for stricter regulations on jeonse (long-term rental deposit) loans to curb soaring housing prices.
  • He acknowledged that while some groups like young people and newlyweds need continued support, overall loan access should be tightened.
  • Lee warned that failing to address property taxes now could lead to a severe crisis in the future, emphasizing the need for political courage to implement necessary reforms.

South Korean President Lee Jae-myung has urged for strengthened regulations on jeonse loans, a system where tenants pay a large lump-sum deposit instead of monthly rent, to prevent housing prices from spiraling further. He identified the near-unlimited provision of these loans as a significant factor contributing to the abnormal surge in apartment prices.

We must strengthen regulations on jeonse loans so that housing prices do not skyrocket.

— Lee Jae-myungPresident Lee Jae-myung explained his policy proposal to control soaring housing prices by tightening regulations on jeonse loans.

While acknowledging the necessity of supporting specific demographics, such as young individuals, newlyweds, and first-time homebuyers who rely on jeonse loans, Lee emphasized that broader access should be curtailed. He proposed a targeted approach, offering "pinpoint support" for low-income households and general loan reductions for others. This strategy aims to stabilize the market by controlling speculative demand fueled by easy credit.

Lee also issued a stark warning about the potential consequences of inaction on property taxes. He asserted that if holding taxes had been normalized earlier, the current real estate price surge might have been averted. "It will explode at some point," he stated, predicting a significant shock to the nation if the issue is not addressed proactively. He stressed the importance of preparing for this potential crisis, even if it means facing political repercussions.

If we had normalized holding taxes in the past, prices would not have risen this much.

— Lee Jae-myungPresident Lee Jae-myung commented on the historical context of real estate policy and its impact on current housing prices.

The president further elaborated on the principle of differential taxation for homeowners. He suggested categorizing homeowners based on factors such as owning one vs. multiple properties, whether they are for self-residence or investment, and the value of the homes. This nuanced approach aims to apply higher taxes to speculative or luxury properties while offering relief for genuine homeowners and those in less affluent areas, including regional cities.

It will explode at some point. It will give a tremendous shock to Korea.

— Lee Jae-myungPresident Lee Jae-myung warned of a potential future crisis if the real estate market issues are not addressed.
DistantNews Editorial

Originally published by Hankyoreh in Korean. Translated, summarized, and contextualized by our editorial team with added local perspective. Read our editorial standards.

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