Lee Signals Comprehensive Overhaul of Real Estate Supply, Finance, and Taxation: "Will Take Necessary Action Despite Political Cost" (Comprehensive)

President Lee Presides Over Real Estate Policy Debate; Session Lasts Over Three Hours

"Goal Is Not Forcible Price Drops, But to Normalize an Abnormal Market"

Helicopter Inspections Planned for Metropolitan Area; Third New Town Construction Timeline to Be Cut by More Than Half

Existing Policy Unconditionally Protected Single-Home Owners; Points Out "One Valuable Home" Speculation Opportunities

Tighter Regulations on Jeonse and Business Loans; Considering Higher Property Tax on Ultra-High-Priced and Multiple Homes

President Lee Jae-myung described the real estate market as a situation where risks are accumulating and could eventually burst. He expressed his determination to respond thoroughly to every aspect of supply, finance, and taxation, even at the cost of political burden. He also revealed a plan to directly identify new housing sites in the Seoul metropolitan area and drastically shorten the construction schedule for the third phase of new towns, while vowing to block the inflow of speculative funds through jeonse loans and business loans. The forthcoming tax reform plan is expected to include a multi-layered property holding tax system—protecting residential, mid- to low-priced, and regional homes while increasing the burden on ultra-high-priced, multiple, and speculative properties.

Presiding over the "National Real Estate Policy Public Debate" held at the KBS Annex on this day, President Lee stated, "Our policy goal is not to forcibly bring down prices, but to prevent prices from being distorted by abnormal supply and demand and to normalize the market."

President Lee especially likened the persistent upward pressure on real estate prices to the collapse of Japan's real estate bubble, warning, "It will burst eventually. We do not know which generation or who will be affected, but it will deal a massive shock to South Korea." He added, "Even if there are political losses, we must prepare. For the entire population, for the future of the country, and for a better long-term situation, we should do what must be done."

On the 23rd, attendees are requesting the floor during the National Real Estate Policy Debate presided over by President Lee Jae-myung at the KBS Annex in Yeouido, Seoul. 2026.7.23 Photo by Yonhap News

"There's No Land Left in Seoul... I'll Use a Helicopter to Personally Inspect New Development Sites in the Metropolitan Area"

When it comes to supply, President Lee repeatedly emphasized the difficulty of securing new sites for development in Seoul and the metropolitan area. He said, "It is almost impossible to find land for development anywhere in Seoul," pointing to clear limits on supply due to both resistance to lifting greenbelt protections and to developing existing urban areas.

Nevertheless, he announced plans to personally check available sites in the metropolitan area. "I’m considering touring the metropolitan area by helicopter," President Lee said. "There may be locations that public officials think are impossible to develop, but from my perspective, there could be a different view." He went on to say, "We are making every effort to discover additional new housing sites," also calling on the public to provide suggestions regarding idle land available for development.

Regarding the delays in launching the third phase of new towns and public housing projects, President Lee expressed serious concern. He said, "The delay in starting construction in already-announced regions is a grave problem," and revealed that the government is considering amending regulations or allowing concurrent procedures—rather than proceeding sequentially—to reduce the more than 60 months currently required by some administrative processes by half or more. He further outlined plans to convert idle industrial and commercial land in the city center into residential land and to supply high-quality, long-term public rental apartments of 83–99 square meters (25–30 pyeong) near subway stations, so that even the middle class can access them.

Regarding the sharp increase in reconstruction and redevelopment construction costs, President Lee ordered a comprehensive review. When debate participants pointed out that not only the rise in construction material costs, but also the use of premium finishing materials and opaque transactions among brokers, cooperative associations, and construction companies are pushing up costs, President Lee responded, "We will examine closely whether these are unavoidable, objective circumstances or if there is fraudulent use of the structural framework." He also cited his experience in which the construction costs of a local housing cooperative fell by tens of billions of won after investigation and adjustment. "If the increase had been unavoidable, it would have been hard to reduce," he said. "A full review is needed."

President Lee Jae-myung is asking participants for their opinions at the National Public Debate on Real Estate Policy held at the KBS Annex in Yeouido, Seoul on July 23, 2026. Photo by Yonhap News Agency

"To Reach Advanced Economy Property Tax Levels, Property Holding Tax Needs to at Least Triple... A Gradual Adjustment Is Needed"

Regarding taxation, President Lee said the government is considering normalizing holding taxes—with the standard based on the typical single-home owner—while reducing the burden on residential, mid- to low-priced, and regional homes, and increasing it on ultra-high-priced, multiple, and clearly speculative homes through a multi-layered tax system. The government plans to announce the "2026 Tax Reform Plan" as early as the end of July.

President Lee stated, "Once we establish the basic standard for a single home, we can provide relief for residential homes, for working- and middle-class homes, and for those in the regions. On the other hand, for extremely expensive homes, multiple homes, or those bought clearly for speculation, we are considering adding extra tax factors." He also suggested that the standard should be "residential use" rather than "actual occupancy" to accommodate those who are temporarily unable to live in their homes due to work or their children's education.

President Lee assessed that the previous system, which unconditionally protected single-home owners, encouraged the phenomenon of people favoring a "smart single home" (i.e., owning only the most valuable house). He alluded to the period when the Moon Jae-in administration raised the comprehensive real estate holding tax rate for multiple homeowners—up to an annual maximum of 3.2%—and sharply increased capital gains taxes, thus tightening regulations.

"The focus on so-called 'the one valuable home' has caused serious problems in our society," President Lee said. "While trying to protect one home per household, we have treated expensive and cheap homes the same, and by failing to distinguish between residential and investment or speculative purposes, we have created opportunities for the most efficient speculation." He stressed that the tax burden should be differentiated according to property price and purpose of ownership, rather than just by the number of homes.

On the level of property holding tax, President Lee pointed out that South Korea's holding tax is much lower than that of advanced nations, emphasizing the need for a gradual adjustment. "To reach the typical level of advanced economies, the holding tax needs to be raised to at least triple the current level. If we did that right away, it would almost cause riots," he explained. "That's why a gradual adjustment is necessary." He added, "Had we normalized the holding tax in the past, housing prices would not have risen this much."

The plan is to pave the way for more properties to be listed on the market, alongside strengthening the holding tax. "If we only strengthen the holding tax without providing an exit path, it won't work," President Lee said, indicating the need to revise transaction taxes, including capital gains tax.

President Lee also questioned the current system, in which single-home owners can receive capital gains tax exemptions repeatedly each time they buy and sell a home. When debate participants suggested limiting exemptions to once in a lifetime or differentiating exemptions depending on frequency or the total amount, he responded, "It's problematic to allow unlimited use of such benefits. There's some merit in granting a full exemption the first time and reducing it from the second time onward."

President Lee also agreed with proposals to enshrine core tax criteria in the law itself—rather than in presidential executive orders—to stop the phenomenon of people waiting out a change of administration. "We should fully listen to public opinion, develop a logical system, and make it airtight against loopholes or misuse; then, we should do as much as possible through legislation," he said.

On the 23rd, participants requested speaking rights at the National Real Estate Policy Forum held at the KBS Annex in Yeouido, Seoul, presided over by President Lee Jae-myung. 2026.7.23 Yonhap News Photo by Yonhap

Jeonse Loans Are the "Main Driver of Soaring House Prices"... Forewarns Comprehensive Strengthening of Financial Regulations

In the financial sector, President Lee expressed an intention to tighten real estate lending overall. However, he also introduced the "targeted finance" principle, whereby specific groups—such as young people, newlyweds, and first-time homebuyers—would still receive selective support. Referring to bank loans, President Lee said, "Financial institutions operate on part of the national right to issue currency, delegated by the state, and thus are semi-public in nature. Should financing be made available for people to buy properties just for profit? The use of public finance for speculative housing purchases must be reconsidered."

He specifically pointed out that the expansion of jeonse loans has fueled both soaring housing prices and rental deposit scams. "In an effort to make renting easier for working-class people, we allowed virtually unlimited jeonse loans," he said, "but jeonse loans have become the main driver either of the housing price surge or of maintaining high prices, and the time has come for adjustment." President Lee went on, "With loans or guarantees nearly covering the entire rental deposit value, rental fraud schemes have enabled people to accumulate multiple homes with almost no capital of their own. Jeonse lending should be generally reduced, albeit exceptions should be made selectively for young people, newlyweds, and first-time buyers," he added.

President Lee also called for the closure of the loophole through which business loans secured by high-priced properties can be used to circumvent housing purchase regulations. He explained that while loans for home purchases are strictly limited, business loans secured against expensive properties receive more generous collateral recognition. "After securing short-term funds to buy a home, people can essentially bypass restrictions by presenting the property as collateral for a different kind of loan," he said. "We need to reconsider the unlimited recognition of collateral value for such loans," President Lee continued, instructing financial regulators to track the use of borrowed funds and strengthen post-lending monitoring. Nevertheless, he said that transitional measures are needed for genuine buyers who have already signed sale agreements but, due to the sudden introduction of lending limits, are unable to obtain the necessary final payment loans.

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