Tax Incentives for 'Good Landlords' Could Naturally Boost Housing Supply

The suspension of heavy capital gains taxes on multiple-home owners expires on May 9. The government expects the tax resumption will prompt these owners to sell, stabilizing home prices and easing the rental market.

Reality differs. While listings temporarily increased ahead of the deadline, most are high-end properties priced above 1 billion won. With tight lending conditions, renters struggle to purchase them. Once the suspension ends, listings will likely dry up again. With combined capital gains and local income taxes reaching 82.5%, selling is not a rational choice for multiple-home owners. They will likely opt for gifting properties, converting to corporate ownership, or passing holding taxes to tenants through higher rents.

Combined with higher holding taxes, costs will likely shift to tenants through rent increases. Current housing lease protection laws remove the 5% rent increase cap four years after tenants exercise contract renewal rights. When this four-year protection ends, tenants face unlimited rent hikes. The burden ultimately falls on the tenants the policy should protect.

The former registered rental housing system granted tax benefits based on formal requirements alone. Some landlords exploited this by evicting tenants after four years, signing new contracts at sharply higher rents, then applying the 5% cap to the inflated base.

I propose a "Good Landlord Certification" system to address these flaws. The concept is simple: provide tax incentives to landlords who substantively protect tenants, regardless of formal registration status.

Three certification requirements apply: First, landlords must not refuse additional renewal requests from existing tenants after they exercise contract renewal rights. Second, rent increases at each renewal must stay within 5% of the previous rent. Third, landlords must not engage in wrongful eviction demands or deposit non-returns that harm tenant housing.

Certified landlords would receive standard capital gains tax rates of 6-45% for a set period. Without mandatory rental periods, they could list properties whenever current leases end, enabling natural market supply. Non-certified multiple-home owners and those acquiring additional homes after May 9 would face heavy capital gains taxes, exclusion from long-term holding deductions, and strengthened holding taxes under current policy.

This system would secure long-term housing stability for tenants, allow landlords to maintain ownership under reasonable tax burdens, and give the government both supply and market stability. Multiple-home owners should not be viewed solely as adversaries but as potential partners in stabilizing the rental market through practical approaches.