“Foreigners cannot buy houses unless they actually live in them.” : South Korea to ban foreigner “real estate shopping” to combat housing crisis

The government has decided to introduce a “transaction permit system” in most metropolitan areas to prevent foreigners from exploiting loopholes in regulations — such as loan restrictions and occupancy requirements that only apply to Korean nationals — for so-called “real estate shopping.” Under the new permit system, buyers will be required to reside in the property for two years, effectively banning “gap investment,” a practice of purchasing homes with tenants already under lease.

On the 21st, the Ministry of Land, Infrastructure, and Transport held a meeting of the Central Urban Planning Committee and designated all 25 districts of Seoul, 23 cities and counties in Gyeonggi Province, and 7 districts in Incheon as land transaction permit zones. Until now, foreign property purchases were only subject to a reporting requirement, where buyers had to file a report within 60 days of acquisition. With the change, they will now need prior government approval.

Outlying areas in the Seoul metropolitan region — such as Icheon, Yangpyeong, and Yeoju in Gyeonggi Province, and Ganghwa and Ongjin in Incheon — were excluded from this measure. For Korean nationals, the existing permit system will remain limited to certain districts, specifically Gangnam, Seocho, and Songpa in Seoul, along with Yongsan.

Starting on the 26th of this month, foreigners wishing to purchase a home in designated permit zones must obtain approval from the relevant city, county, or district office before signing a contract. They must also submit a residency plan, funding plan, and supporting documentation. Once approval is granted, they will be required to move in within four months and reside there for two years. Violations of the residency requirement will result in the imposition of a compulsory fine, and the government is also considering revoking permits in such cases.

The designation of land transaction permit zones is valid for one year but can be extended for up to five years if necessary.