Government must also examine property policy's side effects
The Yoon Suk-yeol administration announced its first real estate policy package Tuesday. Above all, the government has decided to expand benefits for "good landlords" while raising the mortgage ceiling for tenants to prevent a rental home shortage expected to hit tenants in August. More specifically, it plans to give landlords a waiver of the two-year residency requirement needed for tax incentives if they voluntarily curb their rent increases to 5 percent or lower when they renew contracts.
It also will revise the previous government's policy to cap the presale prices of newly built apartments. For starters, the government will let developers and homeowners to better reflect rising commodity prices and other costs to speed up building procedures and increase housing supplies. Similarly, it will not slap heavier taxes on homeowners who buy an additional home if they sell the existing one within two years while exempting the owners of inherited homes from the aggregate real estate tax for at least five years.
All these measures aim to address the housing supply bottleneck, either for sale or rent. Considering that it takes a long time to supply a massive number of new homes, policymakers are trying to release more homes into the market by providing incentives to existing homeowners. However, suppose officials are bent only on easing the tax burden on asset holders. In that case, that will lead to serious adverse effects, such as income polarization and the deepening of social conflicts. It also explains why more careful policy design and implementation are needed.
In addition, the government must consider recent changes in the market environment. In these times of increasing interest rates and galloping inflation, officials should also pay attention to the contracting demand for homes. We hope the new government maintains the stance of considering the different positions of various economic players while ensuring that the market is allowed to function properly to stabilize housing prices.
The Yoon Suk-yeol administration announced its first real estate policy package Tuesday. Above all, the government has decided to expand benefits for "good landlords" while raising the mortgage ceiling for tenants to prevent a rental home shortage expected to hit tenants in August. More specifically, it plans to give landlords a waiver of the two-year residency requirement needed for tax incentives if they voluntarily curb their rent increases to 5 percent or lower when they renew contracts.
It also will revise the previous government's policy to cap the presale prices of newly built apartments. For starters, the government will let developers and homeowners to better reflect rising commodity prices and other costs to speed up building procedures and increase housing supplies. Similarly, it will not slap heavier taxes on homeowners who buy an additional home if they sell the existing one within two years while exempting the owners of inherited homes from the aggregate real estate tax for at least five years.
All these measures aim to address the housing supply bottleneck, either for sale or rent. Considering that it takes a long time to supply a massive number of new homes, policymakers are trying to release more homes into the market by providing incentives to existing homeowners. However, suppose officials are bent only on easing the tax burden on asset holders. In that case, that will lead to serious adverse effects, such as income polarization and the deepening of social conflicts. It also explains why more careful policy design and implementation are needed.
In addition, the government must consider recent changes in the market environment. In these times of increasing interest rates and galloping inflation, officials should also pay attention to the contracting demand for homes. We hope the new government maintains the stance of considering the different positions of various economic players while ensuring that the market is allowed to function properly to stabilize housing prices.
