Houses For Sale In Korea

Footnotes To Transaction Costs Table

The round trip transaction costs include all costs of buying and then re-selling a property – lawyers´ fees, notaries´ fees, registration fees, taxes, agents´ fees, etc.

Currency:South Korea uses South Korean Won. Exchange rate is at US$1 = KRW1,002.10 as of 26th June 2006.

Value Added Tax:Value Added Tax is levied at a flat rate of 10%.

National Housing Bonds:Buyers are required to purchase National Housing Bonds at a rate of about 5% of the purchase price of the real estate. In practice, these bonds are immediately sold at a discounted price of 10% – 15% less than the purchase price of the Bonds.

Legal Fees:Legal fees are around 0.25% to 1% of the property value. A typical lawyer will charge between 5 and 10 hours to prepare the sale agreement at the rate of between KRW100,000 and KRW 250,000 per hour of work.

Registration Tax:Registration tax for acquisition of rights by purchase is 3%.

Acquisition Tax:

Real Estate Agent´s FeeReal estate agent´s fees are generally around 0.20% to 0.90% of the property value.

Education Tax:20% of the registration tax.

Stamp DutyStamp duty is around 0.20% of the property value.

How Difficult Is The Property Purchase Process In South Korea

Upon conclusion, a property sale contract must be recorded by the foreigner to the head of the Shi/Kun/Ku . If the property is located in military installation protection areas, designated cultural properties, and ecosystem conservation areas, foreigners “shall obtain permission from the head of Shi/Kun/Ku before the conclusion of the contract” .

However, remittance of revenue or profit from property in Korea is not allowed. A foreigner who wants to enjoy rental income has two options. One is to establish a ´stock company´ or corporation , which is the same as a U.S. stock company. A foreigner can purchase the property through the stock company, and then remit the revenue out of the country in the form of dividends. The minimum capital required for a ´stock company´ is KRW50 million , and each share must have a minimum par value of KRW5,000 for it to be sold without court approval.

Another way is to register a ´limited liability company´ , and pay the tax before remitting the money. The minimum capital required for a ´limited liability company´ is KRW10 million . A ´limited liability company´ cannot have more than 50 partners.

This issue of remittance is one reason why foreigners tend to hold Korean property through a ´stock company´ or a ´limited liability company´.

Without proper title registration, the occupier of real estate may take ownership through one of the following types of adverse possession:

The following information is contained in the registry:

A Struggle To Bring Down South Koreas Soaring Housing Market Could Doom A Presidency

Moon Jae-in has been through a lot in his three and a half years as South Koreas president: defused a potential war in 2017, brokered three meetings between Donald Trump and Kim Jong Un in 2018 and 2019, and led one of the most successful responses in the world against the coronavirus pandemic in 2020. But this time, his team may have finally met its match: Seouls real estate market.

Real estate is a sensitive political issue everywhere, but in Seoul its explosive. South Koreas wealth has flowed into real estate to an unusual degree because there are few other options. The countrys domestic stock market is good but not great: The chaebol conglomerates are vastly overrepresented in the overall market , making it difficult to have stable and diversified investments. Persistent corporate governance issues plaguing the chaebol sometimes lead to share price manipulation, undermining the confidence of public investors in the system. While investing abroad, especially into the red-hot U.S. stock market, is increasingly becoming more popular, the unfamiliarity as well as the foreign exchange rate fluctuation make the returns difficult to anticipate.

S. Nathan Park is a Washington-based attorney and nonresident fellow of the Sejong Institute.

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The Best Cities To Buy Property In Korea

Korea has a population of around 52 million people and its predicted to increase. Yet, around half of the population lives in Seoul.

Lets have a look at the most interesting cities when investing in residential real estate in Korea.

Seoul

Prices have skyrocketed in Seoul recently and the government has imposed new taxes, trying to curb the escalating prices. Its not strange, as it serves as both the cultural, economical, and political center of the country.

Despite seeing prices going through the roof, locals and foreigners alike continue to invest in Seoul real estate.

The city is divided into 25 districts and one can say that Gangbuk, the Northern part, is the historical area. The Southern part, on the other hand, is called Gangnam with a more modern and premium appeal.

Busan

Busan is smaller than Seoul but has seen a big influx of Japanese and Chinese investors in the past years.

Properties can be bought for a fraction compared to Seoul and places like Hong Kong, Singapore, and Shanghai. At the same time, you can enjoy the great local culture and weather.

Busan is also a major city that hosts many good universities if you plan to send your children abroad.

Being the second-biggest city, it has a more relaxed feeling and is mainly known for having the biggest port in Korea, the Port of Busan. It was established in 1876 and is the fifth busiest port in the world.

Jeju Island

Asian investors, many from China, have poured into Jeju Island in the past years.

Daegu

Incheon

Can Foreigners Buy Property In Korea

Korea is one of a few Asian countries where you can buy residential and commercial property without restrictions as a foreigner. You are treated on a similar level as locals, something thats rare for Asian countries.

Japan is most likely the only country in Asia that treats foreign investors in a similar way. A handful of acts have been issued in Korea though and there are some regulations you should beware of.

This is especially the case if youre a non-resident without previous experience in the country.

The acts are:

• The Foreigners Land Acquisition Act
• The Registration of Real Estate Act
• The Foreign Exchange Transactions Act

Lets have a look at each act to understand what they mean practically.

The Foreigners Land Acquisition Act

The Foreigners Land Acquisition Act explains that when you enter into a Sales Contract with a seller, you need to inform the head of the government within 60 days from the issue date of the contract.

Besides, you should seek approval for purchases of land located in protected areas, for example:

• The military operates
• There are cultural properties with heritage value
• Conservation areas that protect nature and ecosystems

In case you dont apply for a permit if youre obliged to do so, you will either be fined and can face imprisonment.

The Registration of Real Estate Act

This act simply explains the correct procedure when registering a property. It applies to both Korean nationals, foreign residents, and non-residents.

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How To Buy Property In Korea: A Complete Guide

Suggestion: Watch the 5 minutes video tutorial before reading this article

Korea has experienced some of the most impressive growths in the past decades, which I personally believe deserves more attention.

From having a GDP per capita on par with the Philippines and Thailand in the 1970s, it has developed into becoming a leading manufacturer of everything from food products, cosmetics, cars, automotive parts, ships, and electronics.

This was primarily a result of US-backing, an export-oriented economy, and land reforms. Previously, companies were not granted loans from banks unless they met a certain quota of exports, for example.

While Koreas eCommerce market is one of the fastest-growing in the world, its manufacturing industry experiences great growth rapidly, and it will overtake Japan in GDP per capita by 2025.

Looking at its real estate market, foreigners predominantly buy real estate for personal reasons and yields are always not the most important. In this article, I explain how you can buy real estate in Korea, covering a wide range of topics.

Topics covered:

• Property Prices

Can I Get A Residence Permit If I Buy Property In Korea

Youll not get residency automatically by simply buying property.

However, the same as for Japan, youre able to apply for a residence permit through a so-called point system. And the grading is even similar to Japans.

Getting an F-2 Visa

To apply to become a long-term resident under the F-2 visa, you need to get at least 80 points in the point system.

So how does it work?

Here, they mainly look at your age, Korean language proficiency, income, and professional experience. In short, if you want to rank high in the F-2 point system, you should be 30-34 years old, have a Ph.D. in engineering, and fluent in Korean.

If you have a good income and professional experience from Korea on top of that, youre good to go as well.

You also get extra points if you have paid taxes in Korea , studied in Korea, have professional experience from abroad, or have done volunteer activities in Korea.

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Korean Real Estate Agents

There are many international real estate agents operating in Korea, ready to serve both locals and foreigners.

Some of the biggest are:

• CBRE Korea
• Cushman & Wakefield Korea
• RE/MAX Korea

If youre living in Mainland China, Hong Kong, Singapore or any nearby countries, you can also make a short trip to Korea and scout on-site, enjoying being there as a tourist.

Real Estate Agent Commissions

If you use a Real estate agent when buying the property, you usually pay a fee of 0.2% to 0.9%. This is lower compared to many other countries but also related to property prices.

Jeonse vs. Wolse

Tenants rent property through the Jeonse or the Wolse system.

The Jeonse system is not known in other countries and means that you submit, lets say, a one-year total of rent to the landlord.

Later, you receive the money back. You can save money by avoiding paying rent for a year, but at the same time lose money due to the time value of money.

For example, the landlord can use your money for other investments, such as stocks, and receive profits bigger than the rental incomes otherwise received.

The Wolse system is the same as the common rental system we use in other countries. That means, you pay 1-3 months of rent in deposit, then you pay the rent on a monthly basis.

Property Prices In Korea

Despite suffering from the ongoing pandemic, resulting in closed borders and significantly reduced commercial activity in 2020, Korea saw the fastest-growing real estate prices in 9 years during the year.

In 2011, housing prices increased by 6.14%, while we saw an average increase of 5.36% in 2020.

In late 2018, the average house price in Seoul was more than 700 million Wong . In areas like Gangnam, prices have reached well above USD 700,000 on average.

Naturally, this has left the government with no other choice than to increase taxes and introduce so-called non-speculation zones.

If you look for cheaper property, Busan should be of interest and where real estate prices arent even half as high as in Seoul.

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Seoul Tops List Of World Luxury House Price Rankings

Knight Franks report noted that Gangnam, known as the Beverly Hills of Seoul, is still seeing strong speculative activity, helping boost luxury-home prices in the city overall.

Can Foreigners Get Property Loans In Korea

International banks like HSBC, Standard Chartered, Citibank, Agricultural Bank of China, and China Construction Bank all have offices in Korea.

You can also find local banks such as Shinhan Bank that has established a strong presence in Vietnam, due to the many Korean expats residing there.

With that said, its difficult for non-residents to apply for local property loans.

The same as for Japan, you usually need to reside in Korea, and preferably be a permanent resident. Having a Korean spouse might also help you.

Standard Chartered Korea is one bank that offers mortgages to foreigners that reside in Korea and that I recommend you to contact.

Process When Applying for Property Loans

If youre a foreign resident, you first need to provide a Certificate of Local Residency or a Certificate of Foreign National Registration, to prove your residency.

Other documents you need to provide are a Certificate of Employment, Certificate of Immigration, and Certificate of Business Registration.

Due to rapidly increasing property prices recently, especially in Seoul, the Korean Government has made it even more difficult for investors to get property loans.

Taxes such as the capital gains tax have been raised as well to cool down the market.

The easier option is to apply for a property loan in your home country. Just keep in mind that such loans are limited and usually dedicated to cities like London, Sydney, Tokyo, and New York.

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