25.08.21.Today News : Foreigners Require Permit to Buy Housing in Seoul Metropolitan Area, Two-Year Residency Mandated

Foreigners Require Permit to Buy Housing in Seoul Metropolitan Area, Two-Year Residency Mandated

• Government designates Seoul, Gyeonggi, and Incheon as “foreign land transaction permit zones” to prevent speculative purchases

The South Korean government has designated most areas in Seoul and the metropolitan region as foreign land transaction permit zones to curb speculative housing purchases by non-resident foreigners. From now on, foreigners must obtain approval before buying property and are required to reside in the property for two years.

In the future, foreigners will not be able to purchase houses unless they are for actual residence, and they must obtain permission and actually reside in the house for two years after purchase.

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■ Shift to Permit System
The Ministry of Land, Infrastructure and Transport (MOLIT) announced on the 21st that following deliberation by the Central Urban Planning Committee, all of Seoul, seven districts in Incheon, and 23 cities and counties in Gyeonggi Province have been designated as foreign land transaction permit zones. The designation will take effect on the 26th and last for one year, with potential extensions based on market conditions.

This represents the first policy aimed at stabilizing the real estate market by preemptively blocking speculative foreign housing purchases in the metropolitan area.

■ Scope of Permits
Foreign individuals, corporations, and government entities must obtain local government approval to purchase housing in these zones. The designation covers apartments, single-family houses, multi-family houses, row houses, and other multi-unit dwellings, while officetels are excluded. Transactions without approval are invalid, and land without existing housing is also subject to regulation.

■ Residency Requirements and Penalties
Approved buyers must move in within four months and reside for at least two years. Violations can result in enforcement orders and fines of up to 10% of the purchase price. MOLIT will monitor overseas capital inflows and report suspicious cases to the Financial Intelligence Unit (FIU).

■ Strengthened Source of Funds Verification
Foreign buyers must now disclose funding sources, financial institutions involved, and visa type in their transaction plans. This ensures transparency in foreign capital inflows and prevents illicit funding or speculative borrowing-name transactions.

■ Current Status of Foreign Housing Transactions
Foreign housing purchases in the metropolitan area rose from 4,568 cases in 2022 to 7,296 cases in 2023. As of July this year, 4,431 cases have been recorded, representing an average annual growth rate of 26%.

By region: Gyeonggi 62%, Incheon 20%, Seoul 18%. By nationality: Chinese 73%, U.S. 14%. Housing type: apartments 59%, multi-family homes 33%.

Some purchases are speculative, including purchases under trusteeship for non-resident foreigners, high-value transactions, and transactions by minors.

■ Government Outlook
MOLIT expects the permit system to curb speculative demand and ensure housing stability for domestic residents. Officials also aim to prevent overseas capital inflows from destabilizing the market and to enforce residency requirements effectively.

■ Expert Opinions
Experts note that short-term transaction volumes may drop, causing some price volatility. However, long-term effects are expected to stabilize the market and enhance housing welfare for citizens.

One-line summary : The government has designated Seoul, Gyeonggi, and Incheon as foreign land transaction permit zones, requiring prior approval and a two-year residency obligation for foreigners buying houses, aiming to curb speculative transactions.