Tax rates will be raised for owners of high-priced houses worth more than one.six-million U.S. dollars each starting January next year.
That's according to measures released by the Ministry of Economy and Finance on Thursday which sees
speculative housing practices as the main culprit behind the country's soaring household debt estimated at around one.three-trillion dollars.
"Issues concerning real estate are directly related to the livelihoods of the people. This is why the government has done its utmost to stablize housing prices through a series of measures related to real estate and household debt."
The ministry says it'll raise the taxes on owners of two or more expensive houses in speculative areas including those in Seoul and adjacent areas by up to one.two percentage points to a maximum of three.two-percent.
The ministry also says it'll tighten the rules on sales by people with multiple houses, applying the transfer tax if they've owned the house for less than two years rather than the current three.
It'll prohibit homeowners from buying more houses in speculative zones using borrowed money, making it one of the strongest measures laid out by the government so far to curb speculation.
So the loan-to-value ratio when such owners apply for loans. will be ZERO starting next year from the current 40 percent.
Previously, the government had only lowered the loan-to-value ratio to make it harder for people to borrow money to purchase houses not banned the practice entirely.
But for those that do not own a home or are seen as exceptions such as when the owner of one house is buying another to live in and is acknowledged as the end-user safeguard measures are put into place so that their loan-to-value as well as their debt-to-income ratios remain at the current 40-percent level.
Starting Friday the loan-to-value ratio and debt-to-income ratios for multiple home owners who want to borrow money for medical and educational expenditures will be raised by 10-percentage-points to 50-percent.
The measure is seen as a way to induce multiple home owners to sell their properties rather than borrow more money to cover their expenses.
Kim Ji-yeon, Arirang News.