A commercial house in Itaewon-dong, Yongsan-gu, Seoul, purchased by a Chinese (above), and a commercial house in Mangwon-dong, Mapo-gu, Seoul, purchased by another Chinese. [사진 출처 = 소병훈 의원실]– #Chinese A, who received a loan of 1.25 billion won from a domestic bank last October, purchased a commercial house in Mangwon-dong, Mapo-gu, Seoul for 1.6 billion won. The cost that Mr. A spent to buy this commercial house was 350 million won, which was only about 22% of the house price. Moreover, Mr. A was controversial as he bought the house for rental purposes. It is known that he had already owned a house in Korea at the time of purchase.
#Chinese B also purchased a 4-story commercial house in Itaewon, Yongsan-gu, Seoul for 7.8 billion won last year. The amount he received loans from domestic banks amounted to 5.9 billion won.
As such, foreigners such as China are increasingly buying buildings by borrowing more than 60% of their home prices from domestic banks. Accordingly, in order to stabilize real estate prices, there is a movement to strengthen related regulations in the National Assembly.
According to the office of the Democratic Party (Gwangju City Gap) with So Byung-hoon on the 3rd, the number of foreigners’ domestic real estate purchases has recently increased. The number of foreign building transactions increased from 14,570 in 2015 to 21,048 in 2020.
It is noteworthy that the number of cases in which foreigners purchased more than 60% of the real estate price by borrowing from domestic banks has increased sharply. In the past, there were only 0 cases in 2018 and 1 case in 2019, but in 2020, it increased rapidly to 187 cases. Moreover, from the second half of last year, the number of foreigners buying and borrowing more than 60% of the building price was concentrated at 163 cases.
In particular, it was found that foreigners are intensively purchasing shopping malls or commercial houses where loans are available from 60% to 80% of the appraised price. This is a part that can act as a factor of rising related property prices in the future. Accordingly, Democratic Party lawmaker So Byung-hoon is promoting the’Foreign Real Estate Mortgage Loan Act’ (a bill to partially amended the Banking Act) that restricts foreigners without domestic income from receiving real estate mortgage loans from domestic banks.
The bill requires commercial banks to apply the same loan restrictions as housing for commercial real estate, and prohibits real estate mortgage loans to foreigners who do not have domestic earned income within two years of the loan application date.
Rep. So Byung-hoon said, “If the bill to ban foreign real estate mortgage loans is passed, it will be difficult to buy real estate by borrowing billions of billions of dollars from a domestic bank as in the case of Chinese A and B.” As much as that, the government should introduce appropriate regulations,” he stressed.
This amendment was initiated by lawmaker So Byung-hoon, Kwon In-sook, Kim Hoi-jae, Min Hyeong-bae, Shin Jeong-hoon, Yang Gyeong-suk, Yang Jeong-suk, Yoon Hu-deok, Lee Seong-man, Yong-ho Lee, and Lee Hyeong-seok.
Meanwhile, regarding the controversy over the reverse discrimination of domestic banks’ loan regulation, an official from the Financial Supervisory Service said, “In related regulations such as banking supervision regulations, there is no discrimination between Koreans and foreigners in relation to loans.” It was purchased by borrowing a commercial housing that is not available, and this is the same for Koreans,” he explained.
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