Residence Hotels: A Lawyer's Guide to the Rules

TL;DR

Legal regulations and standards for Korea's residence hotel sector

Hospitality and the Law with Attorney Song Ji-eun

02. Residence Hotels: A Lawyer's Guide to the Rules

Writer: Song Ji-eun, Attorney at Law

Editor: Ko Ji-hye, ONDA

Seoul's Magok District recently saw 575,000 people apply for units at Le West, a residence hotel. The odds? 657 to 1. As taxes and lending tighten on apartments, residence hotels have become the hot alternative investment. They don't count toward your housing portfolio, so you dodge comprehensive real estate tax aggregation and capital gains surcharges — a huge advantage.

As residence hotels surge in popularity, regulations are tightening too. This post breaks down the legal framework governing these properties in plain language.

What Is a Residence Hotel?

Residence hotels are essentially officetel-style accommodations that blend residential amenities with short-term lodging operations. They're classified as commercial buildings under the Building Act, not housing under the Housing Act. In other words, they're lodging facilities — not homes.

The problem? Many investors buy them without fully understanding they can't be used as residences.

You Can't Live There

Last April, the government revised the law to clarify: residence hotels cannot be used for residential purposes. Once you acquire one, you must register it as a lodging business. Living there without registration is illegal. And even if you do register the lodging business, you still can't move in, nor can long-term guests register their address there.

Building Act Amendments Incoming

In response, the Ministry of Land, Infrastructure and Transport announced revisions to the Building Act enforcement decree and rules, plus new construction standards for residence hotels. The core goal: clarify that these are lodging facilities requiring business registration — and shut down illegal conversions to residential use.

Key changes:

Building Act definitions will explicitly state residence hotels require lodging business registration under the Public Health Control Act
Sales disclosures must include the text: "Not for residential use — lodging business registration required"
Advertisers who misrepresent residence hotels as housing-eligible will be prosecuted for false advertising, with local governments ordered to crack down

Construction Standards

New construction standards mandate that residence hotels be built with facilities appropriate for lodging operations. They must meet Public Health Control Act standards for lodging businesses. Facilities include front desks, lobbies, linen storage, and keycard access systems. Approval applications must include a lodging business consent form.

Non-compliant buildings will be centrally tracked. Current systems let local authorities manage violations in Excel spreadsheets; the new system migrates everything to the national Seumter platform.

The Building Sales Act enforcement decree will also be revised to require disclosure: buyers must acknowledge in writing that the property is a lodging business and cannot be used as a residence.

What About Properties Already Sold?

For residence hotels already sold, the government plans to strengthen enforcement by distributing notices through community centers warning that residential use triggers penalty fees under the Building Act. Owners will be encouraged to convert their units to residential officetels or housing through proper rezoning.

When Do Penalties Kick In?

On July 29, Rep. Kim Nam-kook and nine co-sponsors introduced a bill to exclude residence hotels from the Building Sales Act, preventing them from being marketed like residential properties. The bill aims to ensure they're registered and operated as lodging businesses per the Public Health Control Act.

The bill hasn't passed yet, but the intent is clear across both ministry proposals and legislative amendments: stop illegal conversions of residence hotels into housing. Enforcement may vary in severity, but penalties are expected soon.