City Leader Initiates Comprehensive Scrutiny of Overseas Parties' Real Estate Acquisitions in Seoul
In August, the National Tax Service launched a special investigation into 49 foreign nationals residing in Seoul, as part of an effort to improve transparency in real estate transactions involving foreigners since July. The investigation focused on foreign nationals who allegedly acquired high-priced houses through illicit means in specific districts, including Gangnam-gu, Seocho-gu, Songpa-gu, and Yongsan-gu [1].
Seoul Mayor Oh Se-hoon has ordered a review of potential regulations on purchases of high-priced real estate by foreign nationals who do not reside in the property. The city government is collaborating with the Seoul Institute to analyze foreign property ownership by nationality, age, and region [2]. Most of the individuals under investigation are from the US and China [3].
The city government has proposed amendments to the Act on Report on Real Estate Transactions to limit real estate acquisitions by foreign nationals who do not live in the property. The proposed amendments would limit such acquisitions to the Land Ministry in Seoul [4]. The city government expressed concerns that these purchases could lead to reverse discrimination against local residents and distort the real estate market [5].
Foreign buyers currently benefit from loopholes in Seoul as they are not subject to the domestic loan-to-value (LTV) and debt service ratio (DSR) limits imposed on Korean nationals when financing real estate through domestic lenders. This has led to increased foreign acquisitions, particularly apartment purchases, after recent loan cap tightening for locals in 2025 [2]. However, foreigners face fines if they leave properties vacant or do not meet usage requirements, though enforcement is less automatic compared to nationals [1]. Lawmakers are proposing legislative reforms to shift from a reporting system to a permit-based framework for foreign property transactions and require foreign buyers to reside in their purchased homes for at least three years, closing regulatory loopholes [1].
Seoul's tax authorities are also cracking down on tax evasion among foreign owners of luxury apartments, uncovering multiple cases involving undeclared rental income and illicit gift schemes, especially in affluent districts [3][4].
Major cities regulate foreign purchases of non-residential real estate through varied mechanisms such as loan restrictions, permit or pre-approval systems, and residency or usage requirements, aiming to control speculative demand and protect local housing markets. For instance, New York generally faces few restrictions on foreign buyers but may encounter additional taxes or filings aimed at preventing speculation. Australia restricts foreign non-residential real estate purchases through the Foreign Investment Review Board (FIRB) approval system and imposes additional stamp duties and taxes on foreign buyers to cool demand. Singapore imposes additional Buyer’s Stamp Duty (ABSD) on foreigners purchasing residential property, while commercial/non-residential properties also require regulatory approvals. Canada implements a Non-Resident Speculation Tax (NRST) in Ontario, imposing extra taxes on foreign buyers of residential property and some non-residential categories [6].
Potential effects on local housing markets include price inflation, speculative risks, regulatory responses, and market segmentation. In Seoul, the rise in foreign real estate acquisitions after tighter loan caps for locals has raised concerns about equity and market balance, prompting legislative and enforcement responses [1][2][3][5]. Other major cities often balance attracting foreign investment with measures to prevent overheating and ensuring housing availability for locals.
Regulations typically combine financing restrictions, ownership/use requirements, permit systems, and tax policies aimed at managing the impact of foreign purchases on the local real estate markets. The city government plans to consult with the Land Ministry to determine the policy direction for high-priced real estate acquisitions by foreign buyers for purposes other than living there [5].
References:
- The Investor
- Korea JoongAng Daily
- Korea Herald
- Yonhap News
- The Korea Times
- Global Property Guide
- The city government is collaborating with the Seoul Institute to analyze foreign property ownership by nationality, age, and region, with a focus on individuals who are from the US and China, and are investing in high-priced real estate in Seoul.
- Lawmakers are proposing legislative reforms to shift from a reporting system to a permit-based framework for foreign property transactions, and require foreign buyers to reside in their purchased homes for at least three years, to limit speculation and close regulatory loopholes in the real-estate finance domain.
