One year after the government expanded land transaction permit zones to cover all of Seoul and 12 areas in Gyeonggi Province, only about one in every 1,000 housing permit applications in the capital has been denied or returned. The government designated the zones broadly to curb speculation, but critics say the measure has failed to stabilize home prices while district offices burn through administrative resources verifying owner-occupancy requirements and conducting residency inspections. Given the paperwork and waiting time applicants face, along with the staffing and administrative costs borne by district offices, critics argue the need for blanket pre-approval of land transactions should be reassessed and that an exit strategy for the permit system should be phased in.
The Seoul Economic Daily analyzed Seoul city data on housing land transaction permit applications across the city's 25 district offices, obtained on the 20th 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. From Oct. 20 last year through Aug. 31 this year, applications totaled 66,276. Of those, 54 were denied and 17 were returned, for a combined 71 cases, or 0.1% of all applications. The approval rate was 96.6%, while 3.3%, or 2,215 cases, were withdrawn by applicants. A significant share of the withdrawals stemmed from funding problems, such as failures to secure loans. The Seoul tally is based on filing dates and covers detached houses, multi-household and multi-family homes, low-rise multi-unit housing and apartments, as well as presale rights, occupancy rights and gifts with assumed debt.
Nowon District, which recorded the highest number of applications at 7,435 as buyers flocked to Seoul's outer districts, had zero denials and just two returned cases. Dobong, Seongbuk, Eunpyeong, Guro and Geumcheon districts also posted zero denials. Those six districts together accounted for 22,790 applications, or roughly 34% of the total, without a single denial.
The rejection rate is so low because district reviews focus on confirming whether applicants meet the legally required use purpose and owner-occupancy conditions. "Rather than screening for speculative transactions, we check whether the exact requirements have been met," an official at Gangdong District said. An official at Gangseo District said: "If the requirements are met and the buyer commits to living there for two years, we approve in most cases. Because we conduct a preliminary review before the formal application, rejections are rare." The result is a system in which the policy goal of curbing speculation is enforced through owner-occupancy obligations, requiring continuous administrative input for verification and monitoring.
An analysis of the actual grounds for denial shows that 26 cases, nearly half of the 54 total, involved requirements tied to deferrals of the owner-occupancy obligation or temporary exemptions. In Dongjak District, one application was denied because the buyer had been assigned overseas, and in Seongdong District, another was rejected because the buyer living abroad could not move in within four months. Some cases involved failure to meet requirements that applicants belong to a household that does not own a home, or to satisfy the lease reference date.
Although the approval rate is high, the administrative burden keeps growing because every application must be reviewed and residency must be verified afterward. According to Kim's office, the average processing time was 14 working days in Nowon District, effectively three weeks, followed by 12 working days in Songpa District, 10 in Gangseo District and eight in Gangdong District. An official at one district office with three dedicated staff said, "Beyond simply accepting documents, a great deal of time goes into counseling, explaining the system and helping applicants fill out forms." Staff also guide applicants unfamiliar with property registries and building ledgers through sample forms.
Field inspections follow approval. District offices check residency once a year for approved cases. "Because we visit in person rather than settling it by phone, we sometimes conduct inspections in the evening or on weekends to accommodate residents' schedules, which is a heavy burden," the Gangseo District official said. "With the dedicated position vacant after a staff member resigned, three employees are handling permit work alongside other duties." Gangdong District has assigned four staff but says it needs more because the team also handles residency inspections. An official at one district office said, "Realistically it is impossible for three or four employees to personally inspect several thousand transactions a year, so we are conducting field inspections mainly on suspicious cases."
With administrative and other social costs mounting, experts say the government should examine whether to maintain overlapping rules that add pre-approval and owner-occupancy obligations on top of existing restrictions. Yang Ji-young, a senior specialist at Shinhan Premier Pathfinder, said: "Regulatory tools such as speculative overheating districts already exist, yet to prevent spillover effects the government blanketed even areas with genuine owner-occupier demand. Areas with low speculation risk need to be considered for release depending on market conditions."
Critics also say the impact on the rental market should be reviewed alongside the administrative burden, because owner-occupancy obligations can constrain the supply of jeonse and monthly rental homes. Yoon Soo-min, chief real estate specialist at NH NongHyup Bank, said: "Easing the requirement that buyers move in themselves could help rental supply circulate. In outer districts, lifting the permit zones could contribute to stabilizing the jeonse market." Still, the possibility that demand shifts to released areas or that gap investment — buying a home while a tenant's jeonse deposit covers most of the price — flows in remains a variable. Yang said policy should be judged by distinguishing between short-term price reactions and the goal of medium- to long-term market stability.
Local governments are also actively calling for adjustments to the scope and duration of the designations. On Sept. 22, Gyeonggi Province proposed to the central government that permit zones be lifted except in areas designated under the Aug. 13 housing supply plan, and that designations be broken down to the level of towns, townships and neighborhoods. The province cited shrinking transactions and the protection of residents' property rights as grounds for the proposal. Seoul Mayor Oh Se-hoon also said at a parliamentary audit of government agencies the previous day that owner-occupancy obligations in permit zones could worsen strains in the jeonse and monthly rental markets and push up sale prices, adding that "a decision will be needed." The government plans to monitor market conditions through the end of the year before deciding whether to extend the permit system.
Kim said: "The government must verify whether requiring pre-approval across all of Seoul delivers effects commensurate with the procedural burden the public bears. It should watch market conditions and lift the designations in phases, starting with areas where overheating concerns are low, including outer districts, and apply them only where speculation risks are confirmed, in full consultation with the Seoul city government and district offices."