Calls grow in South Korea to tighten rules on Chinese-led property shopping
Foreign real estate deals in the country spark debate on reciprocity laws as officials push for stronger regulations
While some government officials are pushing for legal reforms based on the principle of reciprocity, others caution that any regulatory move must follow a thorough assessment of market impact.
According to the Ministry of Land, Infrastructure and Transport on Monday, the Seoul metropolitan government recently sent an official request to the ministry urging it to formalise reciprocity provisions in real estate-related laws such as the Real Estate Transaction Reporting Act.
This followed an order from Seoul Mayor Oh Se-hoon to promptly propose countermeasures regarding foreign land and housing purchases. Reciprocity, in this context, refers to the idea that if a country restricts or prohibits real estate purchases by Korean citizens, then South Korea should impose similar restrictions on citizens from that country. Currently, no real estate law in South Korea includes such a principle.
Foreign ownership of Korean real estate has been steadily increasing. As of the end of last year, foreigners owned around 268 million square metres (2.8 billion square feet) of land in South Korea – a 1.2 per cent increase from the previous year. The number of housing units owned by foreigners also rose 5.4 per cent to 100,216 units as of the end of June 2023.
According to the Supreme Court’s real estate registration data, 8,655 foreign landlords registered lease contracts between January and May this year, indicating active investment.
Calls for tighter rules have intensified due to the limited oversight on foreign transactions, even as foreign purchase rates climb. In particular, China bans or heavily restricts real estate ownership by Koreans within its borders, prompting critics to argue that a reciprocal system is necessary.