Gwacheon City Designated as Land Transaction Permission Zone and Regulated Area

[Suwon Ilbo=Correspondent Yu Je-seong] Following the government's recent designation of Seoul in its entirety and 12 regions in Gyeonggi Province as land transaction permission zones and regulated areas in response to overheated housing prices in certain areas of the Seoul metropolitan region, Gwacheon City has been included in both designations—land transaction permission zone and regulated area—and will simultaneously be subject to strengthened regulations for each.

The land transaction permission zone designation becomes effective from the 20th, and for purchases of apartments or townhouses and multi-family houses that include one or more residential units within apartment complexes in Gwacheon City, permission from the city must be obtained.

Additionally, after obtaining permission, a two-year actual residence requirement is imposed, and transactions of the "gap investment" type—where a down payment is made while the property is leased—are completely prohibited.

Previously, the Ministry of Land, Infrastructure and Transport designated land transaction permission zones targeting foreigners last month, and this measure extends that designation to domestic nationals as well.

In addition, various regulations also apply, including △increased acquisition tax and capital gains tax for multiple property owners △restrictions on presale right transfers △restrictions on re-selection in apartment lotteries, and so forth.

Meanwhile, the regulated area (speculative overheated zone and adjusted target area) designation becomes effective from the 16th, and in regulated areas the loan-to-value ratio (LTV) for housing loans is strengthened from the previous 70% to 40%, making it more difficult to secure housing purchases through loans.

Jang Young-ja, Director of Gwacheon City's Open Civil Complaints Division, stated, "This designation is a preventive measure to establish a sound housing transaction order centered on actual demand and to prevent sharp price increases in the land and housing markets," and added, "We will do our best to eradicate speculative transactions while minimizing inconvenience to citizens."