Ruling Party Seeks to Extend Residency Waiver in Land Permit Zones

* Editor's note: AI PRISM (Personalized Report & Insight Summarizing Media) is an artificial intelligence-based personalized news recommendation and summary service developed with support from the Korea Press Foundation. It selects and provides six news items tailored to each reader type.

1. Ruling Party: "Residency Waiver in Land Permit Zones Through Next Year, Lease Renewals Also Proposed"

Key points: The Democratic Party has formally asked the government to extend the waiver of the owner-occupancy requirement in land transaction permit zones from the end of this year into next year, and to include lease renewals among the transactions covered by the waiver. The current system was supplemented in May of this year after transactions involving properties with sitting tenants were blocked following the designation of all of Seoul as a land transaction permit zone last October, but lease renewals were left out of the waiver, drawing continued criticism that the exclusion undermines housing stability for tenants. The party's proposal is intended to resolve the conflict between the government's tax overhaul, which tightens capital gains taxes on owners of a single home who do not live in it, and the land permit rules, in order to maximize the supply of homes coming onto the market next year.

2. U.S. 10-Year Yield Breaks the 5% Line as Market Bets on a Rate Hike

Key points: Higher international oil prices driven by the widening conflict in the Middle East pushed the yield on the 10-year U.S. Treasury note to 5.039%, the third time it has broken above 5% since just before the 2007 global financial crisis. Brent and West Texas Intermediate futures jumped by around 5% to above $100 a barrel, spreading inflation concerns, and the probability of a Federal Reserve rate increase at the FOMC meeting rose to 94.5% from 87.3% a day earlier. A rate increase would be the Fed's first in three years and two months, since July 2023, and the Bank of Japan is also seen as more than 90% likely to raise rates at its meeting on the 17th and 18th. Analysts said simultaneous rate increases in the United States and Japan would add to upward pressure on domestic market interest rates and increase currency volatility.

3. Korean Project Finance and Non-Bank Lenders: Concerns Over Whether the Weak Link Will Break

Key points: Mixed-rate mortgage rates at the five major commercial banks stood at 4.89% to 7.29%, with both ends up 0.12 to 0.17 percentage points since the base rate increase, and the yield on five-year financial debentures hit a year high of 4.578%, prompting expectations that the upper end could exceed 8%. Korea Ratings' reassessment found that 13.1 trillion won, or 26%, of the 50 trillion won in project finance held by securities firms and capital firms was long overdue, with most of it tied to high-risk development sites. Twenty-two of 32 insurers projected their K-ICS solvency ratios would fall if interest rates rose 0.50 percentage point, and credit card and capital firms that have increased short-term funding were also assessed as structurally vulnerable to a sharp rise in rates.

4. Floor Area Ratios of Up to 1,300% in Yeoksam and Jayang, Starting Seoul's Multi-Center Redesign

Key points: The Seoul city government has selected Yeoksam-dong in Gangnam District and Jayang-dong in Gwangjin District as the first pilot sites for its growth-hub mixed-use development program, applying floor area ratios of up to 1,300% based on general commercial zoning. The Yeoksam-dong site (5,475.1 square meters) sits at the Seonjeongneung Station transfer hub and the Jayang-dong site (5,132.6 square meters) at the Konkuk University Station transfer hub, and the city plans to expand the program to 70 sites by 2030, including 28 growth-hub mixed-use developments and 42 sites for revitalizing areas with growth potential. Seoul will draw up its plan by December of this year and begin administrative procedures in January of next year, and will designate six arterial roads, including Dobong-ro and Dongil-ro, as growth potential corridors to spread development functions.

5. A 49-Story Plan for Changsin-dong, Too: Height Rules Eased and Development Stirs North of the Han

Key points: A revised redevelopment plan for District 3 of Changsin Zone 1 in Jongno District, an urban-renewal-type redevelopment project, would raise the height limit from the existing 90 meters plus an allowance to a maximum of 139 meters, or 49 stories, and the floor area ratio to as much as 1,200%. The plan is open for public review through the 30th of this month. A total of 291 housing units (276 for general sale and 15 public rental units) would be built, an increase of 273 units from the existing plan, with incentives secured under a "green ecological urban center" approach that links ground-level green space with the relocation of an entrance to Dongdaemun Station. Analysts said high-density development is spreading across northern and northwestern Seoul, as seen in the conditional approval through integrated review of the Beomseo zone at Yeonsinnae Station in Eunpyeong District (six basement levels to 29 stories above ground).

6. [Exclusive] Ruling Party to Raise Acquisition Tax Break Threshold for Unsold Regional Homes to 700 Million Won From 600 Million

Key points: Rep. Moon Jin-seok of the Democratic Party plans to introduce a bill this month to amend the Restriction of Special Local Taxation Act, raising the threshold for acquisition tax relief on completed but unsold apartments outside the greater Seoul area to 700 million won or less from the current 600 million won or less. As of the end of July this year, there were 29,152 completed but unsold homes nationwide, of which 24,708, or 84.8%, were outside the greater Seoul area, a share that has been worsening. With both the ruling and opposition parties calling for expanded tax benefits, the bill is seen as likely to pass, and officials are also reviewing a plan to use unsold apartments in the affected regions as housing for employees relocating under the second round of transfers of public institutions to the provinces.