Reasons for Proposal
Recently, the number of foreigners buying real estate in Korea is increasing, and the number of Chinese nationals buying residential real estate is rising sharply. It has a negative effect on price stability in the Korean real estate market and the government’s real estate policies.
Article 7 of the current Act on the Report on Real Estate Transactions, etc., states that land acquisition or transfer by foreigners may be banned or restricted based on the principle of reciprocity as prescribed by Presidential Decree. However, the government does not set forth any Presidential Decree for this provision, and no foreigner faces any restriction based on the principle of reciprocity.
At a time when Korean citizens are not allowed to own any land in China and have various restrictions in acquiring real estate in other countries, allowing foreigners to acquire Korean real estate without facing any restrictions could pose a national problem over the long run.
Hence, it is necessary to strengthen restrictions for the acquisition of Korean real estate by foreigners from the principle of reciprocity, and in particular, it has been pointed out that stricter restrictions must be imposed for residential real estate including apartments.
In this regard, this Act aims to require the government to state restrictions about the acquisition of Korean real estate by foreigners based on the principle of reciprocity in a Presidential Decree and impose restrictions based on the principle of reciprocity on not just land but also buildings. Furthermore, this Act aims to strengthen restrictions based on the principle of reciprocity by allowing the acquisition and transfer of residential real estate in Korea by foreigners, which is directly related to the residential stability of Korean citizens, only to the extent allowable for Korean citizens in that foreign country.
Details
A. Include buildings in restrictions based on the principle of reciprocity regarding foreigners and require the principle of reciprocity to be applied as prescribed by Presidential Decree (Article 7 paragraph 1).
B. Allow the acquisition and transfer of residential real estate in Korea by foreigners only to the extent allowable for Korean citizens in that foreign country (Article 7 paragraph 2 newly inserted).
Major Provisions
Article 7
