'Lease 3 Laws, Infinite Extension of Jeonwolse' Push Causes Landlords to 'Boil Over'

Need to Protect Tenants Amid Soaring Jeonwolse Prices
Many Dissatisfied with Excessive Landlord Property Rights Restrictions
Some Say "Tenants Should Be Interviewed Before Selection"

Real estate sale and lease prices are posted in a shopping area densely populated with real estate agencies in Songpa-gu, Seoul. Photo by Jinhyung Kang aymsdream@

[Asia Economy Reporter Moon Jiwon] As the government and ruling party push for legislation on the so-called 'Three Lease Laws'?the Jeonse and Monthly Rent Reporting System, the Right to Request Contract Renewal, and the Rent Cap System?to curb soaring rent prices, dissatisfaction is growing among landlords who feel these measures impose 'anti-market obligations.'

While measures are needed to protect tenants facing housing instability due to rising rent prices, there are considerable concerns that excessively restricting landlords' property rights could lead to side effects such as sharp increases in Jeonse prices.

According to the National Assembly and real estate industry on the 11th, the government and the Democratic Party of Korea have recently been focusing on devising plans to stabilize the Jeonse and monthly rent market.

With the surge in official property prices this year increasing tax burdens, legislative proposals for introducing the Jeonse and Monthly Rent Reporting System, the Right to Request Contract Renewal, and the Rent Cap System have been rapidly introduced, causing growing dissatisfaction mainly among landlords.

Democratic Party lawmaker Yoon Hoo-duk recently introduced a bill to amend the Housing Lease Protection Act that would allow tenants to exercise the right to request contract renewal once (2 years + 2 years) and cap rent increases at 5%. The intention is to extend obligations currently applied to housing rental business operators receiving tax benefits to general landlords.

Going further, Democratic Party lawmaker Park Jumin proposed an amendment to the Housing Lease Protection Act that would allow tenants to extend Jeonse contracts indefinitely regardless of the landlord’s consent if requested.

In response, voices in the market are rising, calling it an "excessive infringement on landlords' property rights." Especially regarding the 'unlimited extension of Jeonse,' complaints such as "From now on, tenants will have to be selected through interviews" or "I will switch from Jeonse to monthly rent" are increasing.

There are also concerns that excessive tenant protection regulations could further destabilize the Jeonse and monthly rent market. For example, landlords might significantly raise Jeonse deposits before the law takes effect or increase the use of side agreements.

Professor Seo Jin-hyung of Gyeongin Women's University (President of the Korean Real Estate Society) said, "If landlords have no right to refuse contracts and cannot freely set contract amounts, supply will decrease, causing instability in Jeonse prices as a counterproductive effect."

Complaints from rental business operators ahead of a joint inspection scheduled for next month are also growing. The government has stated its intention to impose fines on rental business operators who have received tax benefits but failed to comply with obligations such as limiting rent increases to 5% or less.

A rental business operator owning a multi-family house in Suwon said, "Using a standard of 10,000 KRW monthly rent per 1 million KRW deposit, I alternated between offering a room with a 10 million KRW deposit and 400,000 KRW monthly rent and another with a 5 million KRW deposit and 450,000 KRW monthly rent. After calculating, I found I exceeded the rent increase cap by about 6,100 KRW," adding, "They don’t properly explain the 5% increase limit but still want to impose fines, which is frustrating."

Professor Seo pointed out, "While protecting tenants below a certain amount, it is necessary to reach a social consensus to basically leave the market to operate freely," and emphasized, "Sufficient opinions from the public and experts should be gathered before introducing the system."