A year after Seoul designated its entire territory as a land transaction permit zone, only about one in every 1,000 applications to buy a home has been denied or returned, according to city data. Of more than 66,000 applications, just 71 were rejected or sent back. With nearly all transactions clearing the review, debate is intensifying over whether the rule — which requires prior screening of every purchase contract — serves any real purpose. District offices are devoting substantial resources not only to the screening itself but also to verifying after the sale whether buyers actually live in the homes, prompting criticism that excessive regulation is generating unnecessary costs for society. Some are calling for an exit strategy that would ease the rules in stages, starting with areas where speculation is least likely.
An analysis by The Seoul Economic Daily of Seoul city data on housing land transaction permit applications across the 25 district offices, obtained through the office of Rep. Kim Mi-ae of the People Power Party, a member of the National Assembly's Land, Infrastructure and Transport Committee, found that 66,276 applications were filed between Oct. 20 last year and Aug. 31 this year. Of those, 54 were denied and 17 were returned, together accounting for 0.1% of all applications. Permits were granted in 96.6% of cases, while 2,215 applications, or 3.3%, were withdrawn or canceled by the applicants themselves. In effect, almost every transaction that sought approval cleared the bar.
Nowon District, which drew the most applications at 7,435 as buyers flocked to Seoul's outer districts, recorded zero denials and only two returns. Dobong, Seongbuk, Eunpyeong, Guro and Geumcheon districts also reported no denials. Those six districts together received 22,790 applications, about 34% of the total, without a single denial.
The rejection rate is so low because district reviews focus on confirming that applicants meet the legally defined use purpose and residency requirements. An official at Gangdong District said the reviews "check whether the exact requirements are met, rather than identifying speculative transactions." An official at Gangseo District said that "if the requirements are met and the buyer pledges to live there for two years, we approve in most cases," adding that "because we conduct a preliminary review before the formal application, rejections are rare." The result is a structure in which the policy goal of curbing speculation is enforced through a residency obligation, requiring continuous administrative input for verification and oversight.
An analysis of the reasons for denial shows that 26 cases — nearly half of the 54 — involved grace periods or temporary exemptions from the residency requirement. In Dongjak District, a permit was denied because the buyer was assigned to an overseas posting, and in Seongdong District because the buyer, living abroad, could not move in within four months. Some applicants failed to meet requirements that all household members be non-homeowners, or missed the cutoff date for existing leases.
Even with high approval rates, the administrative burden keeps growing because every application must be reviewed and residency verified afterward. According to Kim's office, the average processing time was 14 working days in Nowon District — effectively three weeks — followed by 12 in Songpa, 10 in Gangseo and eight in Gangdong. An official at one district with three dedicated staff said that "more time goes into counseling — explaining the system and helping people fill out the forms — than into accepting the paperwork itself." Staff also walk applicants unfamiliar with property registers and building ledgers through sample forms.
Field inspections follow approval. Districts check residency once a year for each permitted transaction. The Gangseo official said the office "visits in person rather than settling for a phone call, which means conducting inspections in the evening or on weekends to fit residents' schedules — a heavy burden," adding that "with a dedicated position left vacant after a staffer resigned, three employees are handling permit work alongside other duties." Gangdong District has assigned four staff but says more are needed because the team also handles residency inspections. An official at another district said that "it is simply impossible for three or four employees to go out and inspect thousands of transactions a year, so we focus field inspections on suspicious cases."
With administrative and other social costs mounting, experts said authorities should reassess whether to maintain overlapping rules that add prior approval and a residency obligation on top of existing restrictions. Yang Ji-young, a senior specialist at Shinhan Bank's Pathfinder, said that "with tools such as speculative overheating zones already in place, the designation was extended broadly even to areas with genuine owner-occupier demand in order to prevent spillover effects," and that "for areas where speculation is unlikely, lifting the designation should be considered depending on market conditions."
Because the residency obligation can also constrain rental supply, analysts said the effect on the leasing market should be examined alongside the administrative burden. Yoon Soo-min, chief real estate specialist at NH NongHyup Bank, said that "easing the requirement for buyers to move in themselves could help rental units circulate," and that "in outer districts, lifting the permit zone could contribute to stabilizing the jeonse market." Jeonse is a Korean lease system requiring a large lump-sum deposit instead of monthly rent. One variable is the possibility that demand shifts to deregulated areas or that gap investment — buying a home while a tenant's jeonse deposit covers most of the price — flows in. Yang said policy should be judged by separating short-term price reactions from the longer-term goal of market stability.
Local governments are also pressing for changes to the scope and duration of the designations. On Sept. 22, Gyeonggi Province proposed to the central government that permit zones be lifted everywhere except sites designated under the Aug. 13 housing supply plan, and that designations be narrowed to the town and neighborhood level. The province cited shrinking transactions and the protection of residents' property rights as grounds for the request. Seoul Mayor Oh Se-hoon said at a parliamentary audit the previous day that the residency obligation attached to permit zones could worsen the shortage of jeonse and monthly-rent homes and push up sale prices, adding that "a decision will be needed." The government plans to watch market conditions through the end of the year before deciding whether to extend the permit system.
Kim said the government "must verify whether requiring prior approval across all of Seoul delivers results commensurate with the procedural burden the public bears," adding that it "should lift the designation in stages, starting with areas where overheating is least likely, including outer districts, while watching market conditions, and operate it only where speculation is confirmed, in full consultation with the Seoul city government and the district offices."
