Seoul accepts revision to brokerage commissionsThe Seoul Metropolitan Council has accepted the government’s recommendation to halve the upper limits for commissions for real estate sales and leases, a move that is expected to hit realtors hard in the capital city, which has some of the highest property values in Korea.
The council on Monday passed the revision to the city’s regulation on brokerage fees, which will establish new brackets for housing rentals and sales and accordant broker commissions.
Under the new plan, sales ranging from 600 million ($550,000) to 900 million won can include a commission of up to 0.5 percent, while leases worth 300 million to 600 million won may have up to a 0.4 percent commission fee. Homes valued at more than 900 million won are still subject to a 0.9 percent commission ceiling.
The revision could be applied as early as today after Seoul Mayor Park Won-soon signs the bill. The revision covers the highly populated region in and around Seoul, with Incheon and Gyeonggi having passed the same revision last month.
The previous regulation stated that a brokerage agent and a client may negotiate a commission rate within 0.9 percent on real estate sales 600 million or above, and within 0.8 percent when the lease is valued at 300 million won or higher. The new revision will see those fees nearly halved.
According to the Seoul Metropolitan Government, sales ranging from 600 to 900 million won took up 9.78 percent of all real estate sales last year, while leases from 300 to 600 million won accounted for 13.5 percent of all leases.
The Ministry of Land, Infrastructure and Transport previously recommended in November that all local governments set up new brackets to lower the upper limit for commission fees, citing the rapid rise in lease prices in recent years.
It noted that in 2000, the commission ceiling for buying, selling or leasing a house worth more than 600 million won was set at 0.9 percent. Under current tax codes, high-grade housing includes homes with publicly notified pricing worth 900 million won or more.
In March, the city council’s Urban Planning and Management Committee held off on approving the revision, arguing that it needed further discussion with interested parties. However, in lieu of an alternative, it resubmitted the same bill on Friday.
Local realtors denounced the decision Monday, though it was also lamented in part by the council.
“We said we would come up with a better way to revise the commission percentage, and we put every effort into reviewing the bill, discussing the issue in hearings and with interested parties,” Kim Jeong-tae, the committee’s deputy chairman, said Monday.
“We regret that we passed the bill as it was recommended by the Land Ministry,” he added, expressing concern that the recommendation could hurt local governments.
BY KIM BONG-MOON [firstname.lastname@example.org]