100 Billion Won Cash Purchase... Over Half of Ultra-High-Priced Registered Rental Apartments Unaffected by Loan Regulations [Real Estate A to Z]

Analysis of Registry Records for Registered Rental Apartments in Gangnam, Seoul
Fully Paid Cash Purchases, Loans Repaid...
Private Lenders and Individual Transactions Also Found

In Sangji Ritzville Kyleum 2nd, located in Cheongdam-dong, Gangnam-gu, Seoul, there is a single rental apartment with a size of 85 pyeong (exclusive area 244 square meters). This apartment, once acquired at a court auction by a famous singer, was purchased by a person in their 20s for 10 billion won in 2024. Due to the limited number of transactions, sales and rental prices are not clearly established, but the publicly announced value for this year is 8.661 billion won. In January this year, a lease contract for a unit on a different floor was signed at 7 billion won.

This unit is the most expensive among more than 55,000 registered rental apartments in Seoul based on the publicly announced value. Although it is registered as a rental apartment, there is no record of a separate rental transaction reported on the Ministry of Land, Infrastructure and Transport’s official price disclosure system. The official transaction data for jeonse (lump-sum deposit leases) and monthly rentals compiled by the ministry has only been made public since 2011. As there is no mortgage registered on this property, it is presumed that there is currently no loan secured by the house.

Exterior view of Sangji Ritzville Kyleum 2nd in Cheongdam-dong, Gangnam-gu, Seoul. Naver Maps Street View

Although the government has decided not to allow maturity extensions for mortgage loans on metropolitan area apartments owned by multi-homeowners, including rental business operators, ultra-high-priced rental apartments like the one in Cheongdam-dong are likely to remain unaffected. On April 7, The Asia Business Daily analyzed the certified copies of the registry for the top 10 rental apartments in Seoul by publicly announced value and size, and found that more than half—six of them—either have no loans or have repaid most of them. This indicates that the higher the property value, the less likely it is to have loans from institutional lenders such as banks, increasing the chances of avoiding government regulations.

The previous owner of the Sangji Ritzville Kyleum 2nd rental apartment is estimated to have raised funds through a local agricultural cooperative and a private loan company. There are also records suggesting that individuals, general corporations, or loans secured by other properties were used to obtain funds.

An official from the Gangnam District Office stated, "For registered rental apartments, there are restrictions such as a 5% cap on rent increases, but whether these regulations are followed is judged based on the rental business operator, not the house itself." The official added, "When the operator reports rent, it is compared to the previous transaction, so it is difficult to determine the current occupancy or rental contract status based on the house itself."

The situation is similar for a registered rental unit in Apgujeong Hyundai Apartment. The publicly announced value of this apartment approaches 6 billion won this year. In the past, there were financial transactions such as jeonse deposits, bank loans, and private debts secured by the apartment, but since the current owner acquired it in 2017, there have been no such transactions. This unit was registered as a long-term general private rental apartment in November 2019.

One unit of the 244-square-meter type in Banpo Xi, Seocho-gu, with a publicly announced value of 5.82 billion won, is owned by a corporation and is currently presumed to have no loans. The previous owner had financed the purchase through commercial banks or savings banks, but it appears that all loans have since been repaid.

In Bangbaedong, Seocho-gu, there is also a single registered 83-pyeong rental unit in Bangbae 3rd Epyunhansesang, which does not have a registered mortgage. An apartment in Seocho-dong with an area of 93 pyeong, owned by a small IT company, had some bank loans at the time of purchase, but those are believed to have been fully repaid now.

The real estate industry questions the rationale for registering large, ultra-high-priced homes as rental apartments when there are no outstanding loans. In the past, despite restrictions such as the 5% rent increase cap, benefits such as exemption from heavy capital gains tax were available if conditions like the mandatory rental period were met. However, tax and health insurance benefits were only applicable to units with an exclusive area of 84 square meters or less. A current tax accountant commented, "Registered rental apartments do offer certain tax benefits, such as exemption from heavy capital gains tax, but high-priced apartments in Gangnam are already excluded based on size and value. It is unclear why such properties are registered as rentals when the tax benefits do not clearly apply."

Yonhap News Agency

However, high-priced rental apartments with outstanding loans may be affected by loan regulations. If the maturity needs to be repaid within a few years, automatic extensions will not be allowed and new loans will not be possible. For example, one 61-pyeong unit at Shinhyundai Apartment in Apgujeong-dong has a maximum secured debt amount of 6.7 billion won. Considering that the secured debt amount is typically set at 110–120% of the mortgage loan, it is estimated that more than 5 billion won was borrowed. The publicly announced value of this apartment is 8.2 billion won this year. For a registered rental apartment of 244 square meters in Tower Palace, Dogok-dong, the outstanding loan is estimated to exceed 2 billion won.

Park Wongap, Senior Real Estate Expert at KB Kookmin Bank, said, "For ultra-high-priced homes in Gangnam, they are sometimes purchased entirely with cash or with large jeonse deposits, resulting in no loans from financial institutions," adding, "This is a different pattern from typical real estate investment strategies involving residential properties."

This content was produced with the assistance of AI translation services.