In a bid to calm real estate prices, South Korea’s ruling party said Monday it would seek legislation to levy a heavier tax on property speculation by foreign nationals.

The Democratic Party of Korea and the government said the bill would impose a 20 percent acquisition tax on home purchases by foreign nationals if the buyers do not reside there for more than six months out of the year without an acceptable reason.

The current law states that taxes for foreign nationals buying real estate here are the same as for Koreans, but foreign buyers are not required to submit financing plans and do not face the same restrictions on loan-to-value and debt-to-income ratios when purchasing properties here.

According to the National Tax Service, from 2017 to May this year, 23,219 foreign nationals purchased 23,167 homes worth a combined 7.7 trillion won ($6.4 billion). By country of origin, Chinese nationals purchased the most homes at 13,573, with US citizens trailing far behind at 4,282.

By region, Seoul ranked No. 1 with 4,473 properties worth a combined 3.3 trillion won. Gyeonggi Province ranked No. 2 by value with 10,093 properties worth a total 2.7 trillion won. Owners of homes that accounted for 32.7 percent of the total, or 7,569, never resided in the purchased properties, NTS data showed, suggesting the homes were bought for investment purposes.

Ruling party Rep. Chung Il-young said foreign demand for investment properties in the local real estate market has surged, and the latest bill takes a leaf from other developed countries’ real estate rules designed to stabilize prices. Chung warned that additional bills imposing heftier transfer and comprehensive real estate taxes would be levied on foreign buyers if they fail to uphold the latest legislation.

Singapore, Canada and New Zealand imposes either heftier taxes or stricter restrictions to block speculative real estate buying by foreign nationals.

Following the Moon Jae-in administration’s 22nd set of policy actions announced on July 10 to curb the heated real estate market, South Korea’s National Assembly on Tuesday passed a separate bill aiming to block speculative buying and increase taxation for owners of multiple homes. The property acquisition tax rate was raised to a maximum of 12 percent from the current 3.5 percent for homeowners who own a property worth more than 300 million won in state-designated speculative areas.

By Jung Min-kyung (mkjung@heraldcorp.com)