The announcement of the government's tax reform plan has prompted registered landlords in Seoul, particularly in mid-priced apartment areas, to withdraw rental listings and consider selling their properties. Concerns are growing that this trend could destabilize the rental market, especially in regions like Nowon, Yeongdeungpo, Seongdong, and Dongdaemun, where rental listings have recently plummeted.
According to an analysis by Aju Economy of data from the Ministry of Land, Infrastructure and Transport as of the end of June, there were a total of 30,354 registered private rental units in Seoul, including 4-year short-term and 8-year long-term rentals.
By simply adding the 4-year or 8-year rental obligation periods, it is estimated that about 13,500 units will complete their obligations in the second half of this year. Additionally, approximately 7,480 units are expected to finish their obligations in 2027, and around 6,270 units in 2028.
The core of the tax reform plan is to gradually eliminate capital gains tax benefits for registered rental apartments by imposing a sale deadline. Properties that have already completed their rental obligations must be sold by the end of 2027 to retain existing benefits, such as exemption from capital gains tax and a 50% special deduction for long-term holdings. In 2028, the capital gains tax rate will be halved, and the deduction rate will drop to 30%, with both benefits disappearing entirely in 2029.
As of January 1, 2027, properties still under rental obligations must be sold within one year after the obligation ends to maintain existing benefits. Under the current system, landlords could continue to receive capital gains tax benefits without a sale deadline after their registration was automatically canceled, allowing them to keep renting. However, as the delay in selling increases, the tax burden will grow, potentially leading to more landlords opting to vacate properties instead of renewing rental contracts.
In terms of regional distribution, Nowon District has the highest number of registered private rental units at 3,469, followed by Yeongdeungpo with 1,877, Seongdong with 1,381, Dongdaemun with 1,279, Guro with 990, Seongbuk with 938, Gwanak with 893, Dobong with 872, and Jungnang with 785.
The issue is that rental supply is rapidly decreasing in these areas. According to real estate big data platform Asil, as of today, the number of rental listings for apartments in Jungnang has dropped from 386 to 76 over the past year, a decrease of 80.4%. Dongdaemun also saw a decline from 1,039 to 359, a drop of 65.5%. Dobong and Nowon experienced decreases of 64.5% and 62.1%, respectively, while Guro (-59.9%), Gwanak (-58.5%), Seongdong (-48.9%), Seongbuk (-47.3%), and Yeongdeungpo (-41.1%) also showed significant declines.
On the ground, consultations for property sales among landlords are ongoing. In the Raemian Weave complex in Dapsimni-dong, Dongdaemun District, there were 51 registered long-term private rental apartments as of the end of June. Of these, 30 units are expected to complete their obligations in the second half of this year, 13 in 2027, and 8 in 2028.
A representative from a nearby real estate agency stated, "Landlords who previously rented out properties while benefiting from tax incentives are starting to consider selling after their rental obligations end. Immediately after the announcement, one unit was actually sold, and another landlord with two units is also contemplating a sale."
Registered rental apartments have their rent increases capped at 5% per year, meaning that homes with long-term contracts often have lower rents than the surrounding market. Another real estate agent in the same complex noted, "The rental properties that have transitioned to sales were those with significantly lower rents due to continuous contract renewals. If more rental properties are sold, we could see a reduction in affordable rental options."
Nam Hyuk-woo, a researcher at Woori Bank's real estate research institute, commented, "If non-resident property owners choose to live in their properties for tax benefits, existing rental homes may be converted to owner-occupied residences, further reducing the rental supply. In areas where rental inventory is already low, we could see increased volatility in rental prices."
* This article has been translated by AI.
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