South Korea Restricts Foreign Access to Real Estate Market

Photo: KED Global

South Korea is tightening rules for foreign buyers: starting August 26, 2025, purchasing property in Seoul and its suburbs will only be possible with government approval. The move, linked to rising speculative transactions, also requires mandatory residence in the purchased property. Violations may lead to fines and annulment of ownership, reports KED Global.

New Rules

From August 26, almost the entire capital region — Seoul, 23 cities and counties in Gyeonggi-do, and seven districts of Incheon — will become designated “foreign land transaction permit zones.”

Key points:
- Rules will apply for one year.
- Cover properties over 6 square meters (apartments, multi-family and single-family homes).
Exemptions: inheritance, gifts, court auctions, and officetels (studio-type units popular with investors).

Foreign buyers must:
- Move into the property within 4 months of purchase,
- Reside there for at least two years.

Violations may result in fines of up to 10% of property value, repeatable, or in extreme cases, annulment of ownership. Within 30 days of purchase, buyers must submit documents proving compliance.

Authorities also toughened financing oversight: buyers must provide detailed source-of-funds documentation. Visa type and cross-border transfers will be scrutinized, and suspicious deals reported to the Korea Financial Intelligence Unit (FIU), which may share information with foreign tax authorities.

Reasons: Speculation and Loopholes

Officials noted that foreigners have been increasingly bypassing mortgage limits imposed on Koreans. Since June 27, 2025, household loans have been capped at ₩600 million ($439,000), yet foreign buyers continue acquiring luxury apartments with overseas financing.

Foreigners also exploited a loophole introduced in August 2023, which allowed appointing local managers instead of moving in. Over the past year, 497 properties in the capital region were purchased under this scheme — over 60% by US citizens and about 22% by Chinese nationals.

Tax authorities found many speculative and illegal practices, including money laundering. Some corporate loans, supposedly for business purposes, were redirected to property purchases. The National Tax Service announced investigations into 49 individuals suspected of tax evasion in more than 230 property deals, with estimated losses of ₩200–300 billion ($145–217 million).

Scale of Foreign Ownership

Between January and July 2025, foreigners closed 4,431 deals in the capital region. The total may reach 7,600 by year-end, compared to:
4,568 in 2022,
6,363 in 2023,
7,296 in 2024.

Some recent transactions set price records:
In April, a US citizen purchased a 240㎡ apartment in Hannam for ₩12 billion ($8.7M).
In March, a Maltese investor bought a villa in Gangnam for ₩7.4 billion.

By late 2024, foreign ownership stood at:
China: 56,301 properties,
USA: 22,031,
Canada: 6,315,
Taiwan: 3,360.

According to the Korea Real Estate Board, in Seoul alone, Americans lead with 5,678 apartments (45%), mainly in upscale Gangnam, Seocho, and Songpa. Chinese buyers (2,536 apartments) tend to prefer southwest Seoul districts with existing Chinese communities. Other major groups include Canadians (1,831), Taiwanese (790), and Australians (500).