Song Seok-jun "Why Jeonse Is Bad... Jeonse Supply Will Decrease Due to the Three Lease Laws"

[Asia Economy Reporter Lee Ji-eun] Song Seok-jun, a member of the Future United Party and chairman of the Real Estate Special Committee, expressed concern that the supply of jeonse (long-term lease) will decrease due to the Three Lease Laws, asking, "Why is jeonse bad?"

On the 3rd, Song pointed out on Facebook that ruling party lawmakers were attacking fellow party member Yoon Hee-sook's five-minute speech in the plenary session, making this remark.

Earlier, Yoon criticized the Three Lease Laws in her plenary speech, saying they reduce jeonse and accelerate the era of monthly rent. In response, Yoon Jun-byung of the Democratic Party of Korea rebutted, "The jeonse system is a relic of the development era and will naturally disappear," and Park Beom-gye of the Democratic Party also questioned, "Can landlords easily return large sums of jeonse deposits and switch to monthly rent?"

Regarding this, Song said, "Is the jeonse system bad because it is a relic of the development era? Are you saying the development era was bad?" He pointed out, "When we think of the development era, negative images such as 'dictatorship' and 'wealth concentration' come to mind, but it was a period when resource-poor South Korea achieved high economic growth admired worldwide based on excellent human resources."

He stated, "The jeonse system has served as a ladder for Koreans to own homes and a stepping stone to the middle class, acting as a kind of savings method unique to Korea's housing finance culture," adding, "It is a natural system preferred by the market and the people, so why is it seen as a bad system?"

He continued, "Won't the three regulations controlling the jeonse and monthly rent market affect the supply of jeonse?" He criticized, "In the era of low interest rates, the extension of mandatory lease periods lowers profitability, leading to a decrease in jeonse supply. Additionally, various tax increases, such as property taxes strengthened under the Moon Jae-in administration, make it easier to secure cash for paying taxes by increasing the proportion of monthly rent, inevitably reducing the share of jeonse."

Song predicted, "Will strengthening controls on the jeonse and monthly rent market benefit the protection of the homeless? Generally, tightening regulations increases social and supply costs. As a result, jeonse and monthly rent prices will inevitably rise."

He pointed out, "What the government should do is not to entangle the private rental market but to significantly expand high-quality public rental housing that is affordable and suitable for long-term residence," adding, "Also, providing tax benefits and other incentives to private landlords to encourage good rental practices."