A, who has registered 20 small apartments in Chuncheon and Gangneung, Gangwon Province, as rental housing and is running a rental business, recently received a notice that the registration for rental housing was automatically canceled along with a comprehensive real estate tax bill.
A paid about 700,000 won in comprehensive real estate tax last year, but this year he must pay over 8 million won, more than 11 times that amount. This is because he could not receive the exemption from the accumulation of comprehensive real estate tax due to the expiration of the 8-year rental obligation period granted to private rental housing business operators.
A said, "Currently, prices for regional built apartments are not rising at all; on the contrary, they are falling, and it is difficult to find tenants," adding, "Landlords who bought regional apartments to take advantage of tax benefits 8 years ago and registered them as rental housing are now faced with the bombarding of comprehensive real estate tax notices once their rental period ends."
The system for private apartment rental business operators was implemented during the Moon Jae-in administration in 2017 as part of the "measures to activate rental housing." Once registered as a rental business operator, even if one owns multiple residential dwellings, they would be provided with the benefit of exemption from the accumulation of comprehensive real estate tax if they fulfill the rental period of 4 or 8 years.
However, three years later, in 2020, when housing prices overheated, the apartment rental business operator system was abolished again. Unlike non-apartment properties, apartments were not allowed to be re-registered after the expiration of the rental obligation period. Furthermore, joining a surety insurance was made mandatory for all registered rental business operators.
Landlords who registered as rental business operators to take advantage of tax benefits at that time and were operating multiple apartments are now suffering from the burden of comprehensive real estate tax pressure after their business expiration period.
Landlords commonly express that even if they want to sell their apartments out of fear of comprehensive real estate tax, the severe recession in the regional real estate market means no transactions are occurring.
B, a private registered rental business operator who rents out about 10 apartments in various regions such as Jeollado and Busan, said, "The business period expires in July, and I cannot sleep at night due to the comprehensive real estate tax," and he noted, "In Seoul, apartment transactions are active and apartment prices are skyrocketing, but the regional real estate market has neither buying momentum nor rising prices."
A also stated, "Even if I list the regional apartments for sale on the real estate market, I receive no inquiries," adding, "Real estate agencies I used to do transactions with have closed due to lack of business, and apartment stores have also remained empty and desolate for a long time."
Rental business operators have requested that the mandatory cancellation system for registered rental business operators be relaxed, at least in regions where the real estate recession is severe.
A pointed out that "government policies regulating multiple homeowners are exacerbating the difficulties of the local real estate market, regional construction companies, local landlords, and local tenants," stating, "Unlike the capital region where infrastructure is concentrated, the lack of jobs is accelerating the hollowing out phenomenon in regions with worsening population outflow."
He added, "If the same policies are implemented with identical criteria in Seoul and the regions, Seoul landlords may endure, but local landlords are bound to collapse," warning, "If local rental business operators cannot pay real estate taxes, and their apartments go to auction, that burden will be directly transferred to the tenants, creating a vicious cycle."