Democratic Party Plans to Pass Three Lease Laws This Month
Disagreement Over Rent Increase Rates and Renewal Counts
[Asia Economy Reporter Moon Jiwon] The ruling party lawmakers' successive proposals to amend the 'Lease 3 Acts' are exacerbating the already unstable confusion in the jeonse and monthly rent market. Although the ruling party and government plan to complete the legislation within this month, there are criticisms that lawmakers are flooding excessive legislative bills aimed at winning votes without considering the reality.
According to the National Assembly on the 16th, Lee Won-wook, a member of the Democratic Party of Korea, took the lead in proposing an amendment to the 'Housing Lease Protection Act' the day before, which introduces the right to request contract renewal and the rent ceiling system among the Lease 3 Acts. Unlike previous related bills, it includes applying the rent ceiling system not only at contract renewal but also to new contracts.
The framework of the Lease 3 Acts agreed upon by the ruling party and government allows tenants to extend the lease period once for two years after the basic two-year lease period, and prohibits raising the rent by more than 5% at renewal. However, even within the ruling party, bills that deviate from this basic framework continue to emerge.
Even regarding legislation on the right to request contract renewal, there are various proposals. Park Hong-geun, Baek Hye-ryun, and Yoon Hu-duk proposed a one-time extension (2+2 years), Kim Jin-ae and Lee Won-wook proposed a two-time extension (2+2+2 years), and Park Joo-min (all from the Democratic Party) proposed unlimited renewal unless there are special reasons. Moreover, Shim Sang-jung of the Justice Party proposed a bill allowing two extensions over three years.
Regarding the rent ceiling rate, the contents vary widely depending on the bill, such as 5%, inflation rate, or 'base interest rate + 3 percentage points.'
In particular, many bills, under the pretext of protecting tenants, effectively deprive landlords of their basic rights, raising concerns about unconstitutionality. Even looking at the content proposed by Lee Won-wook, the bill applies the rent ceiling system based on the previous lease contract not only at contract renewal but also for new contracts, raising concerns about excessive infringement of private property rights.
In the market, there are criticisms that the ruling party and government are creating fear by making both landlords and tenants uneasy without clearly announcing standards. In fact, when Park Joo-min proposed the 'unlimited lease extension' bill, fear spread in the market that landlords' property rights could be excessively infringed, leading to side effects such as landlords attempting to sharply raise rents in a short period or evict existing tenants.
Seo Jin-hyung, president of the Korea Real Estate Society (professor at Gyeongin Women's University), said, "The political circles are introducing the Lease 3 Acts as populist policies because it increases votes," adding, "Since the purpose of the Housing Lease Protection Act is ultimately to stabilize housing for the common people, it is necessary to protect lease contracts below a certain amount and leave contracts exceeding that to the market."
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