[Exclusive] Democratic Party to Implement 'Lease 3 Laws' Immediately Without Grace Period

Jin Sun-mi, Chair of the National Assembly Land, Infrastructure and Transport Committee, is delivering opening remarks at the government-party meeting on comprehensive real estate measures held at the National Assembly on the 15th. Photo by Yoon Dong-ju doso7@

[Asia Economy Reporter Park Cheol-eung] The Democratic Party of Korea is moving toward applying the three lease laws, including the rent ceiling system, immediately without any grace period. This is to minimize side effects such as a sharp increase in rent during the grace period.

On the 15th, a Democratic Party official said in a phone interview with Asia Economy, "Generally, even after a bill is passed, a grace period is set because physical time is needed to delete or change related enforcement ordinances, but in the case of the three lease laws, they are being promoted to be enforced immediately upon promulgation," adding, "The impact on the market is significant, and it seems inevitable to prevent rent increases that may occur during the grace period."

The three lease laws include the right to request contract renewal, which guarantees a longer lease contract period; the rent ceiling system, which limits rent increases to a certain percentage; and the lease reporting system, which aims to better understand the rental market.

There are considerable concerns that landlords will raise rents sharply before the enforcement of the three lease laws, thereby placing a greater burden on tenants. Especially since the July 10 measures, which focus on strengthening real estate-related taxation, were announced recently, there are expectations that the burden will be passed on to tenants.

Considering these points, the Democratic Party holds the position that the three lease laws should be passed promptly during this month's extraordinary session of the National Assembly. A Democratic Party official said, "The three lease laws can be seen as bills that are a matter of life and death related to real estate," adding, "They must be passed in the July extraordinary session at the latest, and no grace period should be given. If we hesitate, problems may arise again, so it is important to implement them with a sense of urgency."

The Housing Lease Protection Law Amendment Coalition, composed of about 100 organizations including the People's Solidarity for Participatory Democracy, urged the Future United Party to support the three lease laws at a press conference in front of the National Assembly on the 14th, stating, "We must actively work toward passing the bill that does not allow a grace period for enforcement and applies to renewals of existing contracts. This will dispel concerns about short-term side effects and promote long-term housing stability for tenants."

Park Hyo-joo, a coordinator of the People's Solidarity for Participatory Democracy's livelihood team, said in a phone interview with Asia Economy, "If a grace period is given, rents can be raised during that time, making it difficult to see the effects of the three lease laws."

Currently proposed bills on the right to request contract renewal include options for 4 years (2+2 years), 6 years (3+3 years, 2+2+2 years), 9 years (3+3+3 years), and even no fixed term. The rent ceiling rate is generally 5%, but in addition, on the 14th, Democratic Party lawmaker Yoon Ho-jung, chairman of the National Assembly Legislation and Judiciary Committee, proposed a standard rent bill. Under this bill, provincial governors select standard houses annually and calculate standard rents to be used as guidelines for lease contracts.

Some point out that so-called "good landlords" may suffer losses. An industry official said, "If the law is enforced indiscriminately without considering special circumstances, only 'good landlords' who had set rents below market prices will be harmed."