Off the wire
• (Sports) Chinese, Singaporean and S. Korean ballkids to feature at Australian Open  • UCLA ranks most applied-to university in U.S.  • Cambodia collects 2.4 bln USD from taxes last year  • Service module of China's lunar orbiter enters 127-minute orbit  • Vietnam considers major bank mergers in 2015: central bank  • Three hikers die in central B.C. province of Canada  • Hong Kong shares up 0.53 pct by midday  • Malaysian court restores conviction against policemen in Mongolian model murder  • Japan, China hold maritime crisis talks in Tokyo  • Pope Francis arrives in Sri Lanka  
You are here: 　 Home

S. Korea to boost home lease in private sector with tax incentives

Xinhua, January 13, 2015 Adjust font size:

South Korea plans to boost home lease in the private sector with tax incentives to help reduce burdens among middle-income families for residing costs, sources said on Tuesday.

Six ministries, including the Finance Ministry and the Land and Transport Ministry, have submitted a report to President Park Geun- hye, featuring the home lease-boosting scheme and other economy- stimulating measures.

The government will reduce the housing acquisition tax by 50 percent if private companies, including construction firms and real estate developers, rent homes for eight years in a row, according to the plan.

No corporate tax will be imposed on home rent profits for eight years as well.

The trend is changing from Jeonse to the monthly home rent here in South Korea, increasing burden for residing costs.

Jeonse is the country's unique type of housing lease, where a tenant pays a certain lump sum of deposit instead of paying monthly home rent. A landlord can be paid monthly rents by putting the lump sum deposit in bank accounts.

Amid lower interest rates, landlords are getting in favor of monthly home rents, raising burden for residing costs. The Bank of Korea cut its benchmark interest rate twice in 2014 to a record low of 2 percent.

By inducing private businesses to participate more in the home lease market, the government predicted a rising supply of home lease, resulting in lower rent payments.

The government, meantime, is seeking to continue reform on public companies by restricting the total amount of bond issuance to reduce massive debts in the public sector.

It will introduce the performance-based wage system and the so- called "wage peak" program, expanding those to the private sector. The wage peak program means that a wage begins to reduce at the certain age of workers to increase the retirement age to about 60 in the long term by reducing labor costs for companies. Endi