“Among the actual members, there are those who need to rent out their homes and receive the security deposits in order to pay the balance and the share of the maintenance project. However, due to the enforcement of regulations, there are quite a few cases where they are struggling because they cannot find tenants. Real estate agents are also unable to provide clear guidance.” (An official from a real estate agency in Jamwon-dong, Seocho-gu, Seoul)
On the 30th of last month, the Maple Jayi, a large complex with 3,307 households in Jamwon-dong, Seocho-gu, Seoul, began moving in. However, some members are confused because they cannot find tenants due to the government’s ban on “conditional transfer of ownership” for rental loans.
The government announced the household debt measures on June 27 and prohibited conditional transfer of ownership for rental loans at the time of moving in. The intention is to prevent rental loans for 'gap investment.' In simpler terms, this means that the home buyers need to find tenants who can pay the deposit in cash without a loan to cover the remaining balance with the security deposit. With the purchase of homes involving rental deposits effectively blocked, the upper limit for mortgage loans has been set at 600 million won.
Until the announcement of the measures, conditional rental loans are impossible for complexes in the metropolitan area and regulated areas that did not sign a lease agreement. This also applies to complexes that are about to move in after reconstruction.
Confusion arose at Maple Jayi, which began moving in last month, following the announcement of these policies. An official from a real estate agency in Jamwon-dong said, “Tenants who put down any amount of deposit before the government’s regulatory policy announcement are proceeding with the subsequent procedures with peace of mind, but most of those who just tried to reach out after the announcement have given up. There was even a case where someone canceled their contract over the weekend after not paying the deposit.”
An official from a real estate agency in Jamwon-dong said, “A client who visited for counseling today was a one-house household from another region who wanted to sell that house due to concerns about their children’s education and move to this complex. However, they were troubled by the 600 million won limit and ultimately returned after some consideration.”
Homeowners who cannot find tenants are equally frustrated. An official from a real estate agency in Jamwon-dong noted, “Homeowners who can pay the remaining balance with rental deposits are anxiously anticipating whether rental prices will drop.”
Currently, the asking price for rentals at Maple Jayi is around 1.5 billion won for an exclusive area of 84 square meters. Although it’s not a significantly lower price compared to before, some properties have seen reductions in asking prices by about 50 million to 100 million won. As financing regulations tighten ahead of the payments due at the end of August and rental units are flooding onto the market, there is growing demand to attract tenants even if it means lowering prices.
Officials from real estate agencies in the region explained that rental asking prices have not significantly decreased. They reacted that Maple Jayi is a high-end newly constructed complex, so the impact is less. An official from a real estate agency in Jamwon-dong remarked, “The rental prices are on par with the sale prices of apartments in other regions, so many of the tenants have sufficient financial means,” adding, “While some homeowners are impatient about not being able to attract tenants, a significant number have chosen to wait rather than lower their prices.”
In addition to Maple Jayi, major complexes in Seoul such as RAEMIAN One Perla (1,097 households) in Bangbae-dong, Seocho-gu, Cheongdam LEEL (1,261 households) in Cheongdam-dong, Gangnam-gu, and Jamsil RAEMIAN I-Park (2,678 households) in Sincheon-dong, Songpa-gu are also about to begin moving in. There are market predictions that confusion may also arise in these complexes.