"Lease Protection Act, Problems Due to Insufficient Protection"
"United Future Party, We Hope You Present Measures to Protect Tenants' Basic Housing Rights"
Sim Sang-jung, leader of the Justice Party, is speaking at the Executive Committee meeting held at the National Assembly in Yeouido, Seoul, on the morning of the 3rd. [Image source=Yonhap News]
[Asia Economy Reporter Heo Midam] Sim Sang-jung, leader of the Justice Party, criticized Yoon Hee-sook, a member of the Future United Party, on the 3rd, saying that her '5-minute speech' lacked "empirical evidence."
In a post on her Facebook that day, Sim said, "There is controversy over whether the recently passed Lease Protection Act is 'legislation to protect rights' or 'legislation that infringes on rights.' Yoon Hee-sook's opposing debate triggered this," she said.
She stated, "The claim that extending the contract period by 2 more years will dry up the Jeonse market and eventually force Jeonse tenants into monthly rent is a concern," adding, "It is true that Jeonse is decreasing as a trend, so Jeonse demanders would naturally be worried."
However, Sim pointed out, "Yoon's argument exaggerates side effects without empirical evidence and risks misleading the purpose of the Lease Protection Act," and rebutted Yoon's speech with three grounds.
First, regarding Yoon's claim that although tenants are guaranteed 4 years of residence, "after 4 years, they will inevitably be forced into monthly rent," Sim said, "According to the 2019 Housing Survey, the average residence period of tenants is 3.2 years, and in the market, contract renewals are already happening once, so this bill only extends it by 0.8 months," adding, "After 4 years, the 5% cap will not apply, so it is not a law that unilaterally infringes on landlords' profits."
Sim also cited 'continued low interest rates' and 'increase in single-person households' as the biggest reasons for the decrease in Jeonse. She explained, "The ratio of Jeonse to monthly rent reversed back in 2012, and as of 2019, monthly rent accounts for 60.3%, Jeonse 39.7%."
Lastly, she said, "In the Seoul Jeonse market, many landlords hold houses through gap investment without sufficient funds, so it is questionable whether the conversion from Jeonse to monthly rent will happen rapidly," adding, "According to May's Seoul city sales transaction data, the proportion of gap investment is 52.4%." she said.
Among these, Sim pointed out the high 'Jeonse to monthly rent conversion rate' as a concern for the promotion of Jeonse's conversion to monthly rent. She said, "In a situation where the consumer price inflation rate fluctuates between 0% and negative, a 4-6% monthly rent conversion rate is unfair to tenants," adding, "Since it is stipulated by presidential decree, I hope the government quickly lowers it to reflect reality. This will also be an answer to the opposition parties expressing concerns about the disappearance of Jeonse."
She then emphasized, "The current Lease Protection Act is problematic because the protection is too insufficient," adding, "At minimum, considering children's education, the contract period should guarantee 9 years of residence with 3 renewals over 3 years each. The rent cap should also be linked to the consumer price inflation rate. Additionally, the initially omitted initial rent and new rent should be included within the regulatory scope."
Finally, Sim said, "Yoon Hee-sook's opposing debate was excellent in representing landlords' anxieties due to institutional changes, but the Future United Party should present measures to protect tenants' basic housing rights, which should come before market logic," she added.
Yoon Hee-sook, a member of the United Future Party, is speaking out against the Lease Protection Act at the National Assembly plenary session on the 30th of last month. [Image source=Yonhap News]
Earlier, on the 30th of last month, Yoon drew attention by delivering a speech criticizing the '3 Lease Laws' at the National Assembly plenary session.
In her speech, Yoon said, "I moved in May, and from the moment I moved until now, I have been worried about 'what if the landlord tells me to leave after 2 years,'" adding, "But looking at the bill passed today, I was not happy."
She continued, "What came to my mind was that after 4 years, I would inevitably have to move into monthly rent," adding, "There will be no more Jeonse, and that is my concern." Yoon explained, "The rental market is very complex, and landlords and tenants must coexist. If landlords are disadvantaged to favor tenants, landlords will raise prices or leave the market."
She said, "I absolutely support protecting tenants, but the government must bear the burden. The moment landlords become afraid to rent out, the market will collapse."
Yoon also criticized, "With the low-interest era, the Jeonse system has entered a path of disappearance, but many people still prefer Jeonse," adding, "However, this law will cause it to disappear too quickly."
Finally, Yoon questioned the Democratic Party, saying, "With what guts and arrogance did you pass this (3 Lease Laws) without proper review?" and warned, "Those who made this law and the Democratic Party that proceeded without thorough deliberation will be remembered for a long time," concluding her speech.
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