Government efforts to curb housing speculation could end up undermining the private rental supply base and saddling companies with a double burden, industry sources warn.

Under the government’s Sept. 7 housing measures (the “9/7 package”), mortgages to purchase homes are now effectively off-limits to home-trading and rental business operators in the Seoul metro and other regulated zones.

At the same time, the National Tax Service (NTS) has begun applying comprehensive real estate holding tax (CRET) aggregation to certain registered rental units because of business-code mismatches—raising the prospect of back-tax bills.

Critics say the policy risks “burning down the house to kill the bedbugs”: in trying to deter speculation, authorities may also scorch the very private rental supply meant to stabilize housing.

The government framed the 9/7 package as “strengthening demand management” to prevent speculative inflows and outsized household leverage from amplifying market volatility.

The headline change: in the Seoul capital area and designated control zones, the loan-to-value (LTV) ratio for mortgages extended to home-trading and rental business entities was cut from 30–60% to 0%, effective September 8—closing a channel authorities say some multi-home owners used for gap-buying via business loans.

The unintended consequence, market participants argue, is that the restriction also crimps normal treasury management for bona fide rental operators. Fewer balance-sheet tools for corporate landlords could depress new acquisitions by institutional rental platforms, setting the stage for medium-term supply shortfalls and renewed volatility in the lease market.

The clampdown also collides with the strategy favored by global investors—KKR, CPPIB, GIC, M&G and others—who have been scaling up in Korea’s corporate rental market by converting underused hotels and older downtown offices into modern rental housing.

Financing is the oxygen for those conversions; a hard stop on mortgages for rental entities tightens the funding spigot and weakens Korea’s overall investment appeal, investors say.

The net effect: a policy aimed at curbing speculation could burden the private rental pipeline that policymakers also rely on to expand housing options.

Experts recommend tailoring the rules: relax credit limits for genuine long-term rental operators, carve out exceptions for hotel/office-to-rental conversions, bolster government-guaranteed low-rate facilities, tighten registration criteria, and recalibrate tax incentives so supply keeps flowing while curbing leveraged speculation.

A separate administrative issue is stoking anxiety among rental businesses. According to the Korea Housing Builders Association, the NTS has notified some operators that certain units will be aggregated for CRET—and subject to back-tax assessments—because of industry-code errors on business registrations.

In many cases, local tax offices assigned default codes at registration, or construction-type REITs failed to file post-completion code corrections. Those procedural gaps can disqualify units from CRET aggregation exemptions and lead to sizable tax liabilities.

The Ministry of Land, Infrastructure and Transport has begun urgent fact-finding through industry groups, but many projects may already face penalties, undermining confidence—especially among construction-type rental sponsors that the government has actively encouraged.

The result, insiders say, is a contradictory mix: foreign investors strained by finance rules, and domestic construction-led rental operators hit by administrative snags.

An industry official summed it up: “This is the moment to balance anti-speculation goals with rental-supply activation. At a minimum, penalties stemming from clerical errors should be corrected swiftly. Catch the bedbugs—don’t burn down the house.”