On August 21, the Ministry of Land, Infrastructure and Transport (“MOLIT”) designated and announced 25 districts (gu) in Seoul, 23 cities (si) and counties (gun) in Gyeonggi-do, and seven districts (gu) in Incheon as land transaction approval areas for foreigners, pursuant to the Act on Report on Real Estate Transactions (the “Act”) through its ministerial notification (MOLIT Notification No. 2025-1058). Permitted uses include “single-family houses, multi-family houses, apartment buildings, condominium houses, and multi-unit houses” (collectively, the “Houses”), as determined in accordance with Annex 1 of the Enforcement Decree of the Building Act. The designation is already in effect as of August 26. It is effective from August 26, 2025 to August 25, 2026.

Designation of Land Transaction Approval Areas and Approved Persons (“Foreigners, Etc.”)

According to the MOLIT Notification, “foreigners, etc.” as the term is defined in Article 2, Subparagraph 4 of the Act, are subject to the approval requirement when acquiring the Houses in the land transaction approval designated areas. 

“Foreigners, etc.” under Article 2, Subparagraph 4 of the Act include not only “individuals who do not have the nationality of the Republic of Korea” (Article 2, Subparagraph 4, Item (a)), but also “corporations or organizations established under foreign laws and regulations” (Article 2, Subparagraph 4, Item (b)), as well as “corporations or organizations in which individuals who do not have the nationality of the Republic of Korea, or corporations or organizations established under foreign laws and regulations, hold 1/2 or more of the capital or 1/2 or more of the voting rights” (Article 2, Subparagraph 4, Item (e)).

Purchasing Private Rental Housing may Require Land Transaction Approval Depending on Shareholder Composition of Investment Vehicle

According to the MOLIT Notification and relevant provisions of the Act, foreign corporations - specifically including investment vehicles such as corporate-type funds or REITs, where foreign individuals or corporations hold 1/2 or more of the capital or voting rights - may also be subject to land transaction approval requirements.

Therefore, acquisition of the Houses for the purpose of engaging in the rental business in the Seoul metropolitan area will require an examination of whether land transaction approval is needed, depending on the composition of the purchaser’s shareholders. To the extent the approval is required, it may impact the transaction schedule and structure so additional assessment may be necessary.

[Korean Version]