Mandatory 10-Year Period for Registered Rental Housing, Obligation to Subscribe to Rental Deposit Guarantee

[Asia Economy Reporter Yoo In-ho] Starting from the 18th, the minimum mandatory lease period for newly registered rental housing will be extended from 8 years to 10 years. To prevent landlords from failing to return deposits, it will be mandatory for all registered rental housing to subscribe to rental deposit guarantees.

The Ministry of Land, Infrastructure and Transport announced that, following the July 10 real estate measures, the amendment to the Special Act on Private Rental Housing reflecting these registration rental system reforms was approved at the Cabinet meeting on the 11th and will be promulgated and immediately enforced on the 18th. The amendment to the Special Act on Private Rental Housing passed the National Assembly plenary session on the 4th.

The registration rental system, introduced in 1994, has been operated in a form that grants public obligations to registered operators in private rentals to stabilize tenants' housing, in exchange for tax benefits.

However, with the enforcement of the three lease laws, similar short-term 4-year rentals have been abolished, and the public obligations of rental operators have been strengthened to protect tenants.

Accordingly, short-term rentals (4 years) and long-term general apartment purchase rentals (8 years) will be abolished. Previously, at the time of rental registration, it was possible to register under short-term (4 years), long-term general, or public support (8 years) types, but going forward, short-term rentals and long-term general apartment purchase rentals cannot be newly registered.

Conversion from the existing short-term rental type to long-term rental (long-term general or public support) is also prohibited.

From now on, only long-term rentals can be newly registered, and the minimum mandatory lease period will be extended from the existing 8 years to 10 years. However, for long-term rental housing already registered, the minimum lease period will remain 8 years as before.

Subscription to rental deposit guarantees will also be mandatory for all registered rental housing. For construction rentals, all are subject to mandatory subscription, and for purchase rentals, this applies only to bulk purchases within the same complex of 100 households or more.

Additionally, local government heads may refuse registration applications if they judge that it is difficult to subscribe to rental deposit guarantees, considering the creditworthiness of the rental operator and the debt ratio of the rental housing.

The system reforms related to strengthening the public obligations of rental operators to protect tenants, following the December 16 real estate measures last year, will also be implemented from December 10.

To strengthen the public responsibility of registered rental operators, after the law takes effect, registration will be restricted for 'minors' or 'those whose registration was canceled due to major violations of the Private Rental Housing Act and for whom 2 years have not yet passed.'

If a rental operator delays the return of rental deposits or provides false or fraudulent information regarding the rights of rental housing, the local government head may cancel the rental operator's registration ex officio.

Rental operators are required to provide tenants with information about tax delinquency status and the status of senior priority deposits at the time of lease contracts, and a fine of up to 5 million KRW will be imposed for violations of this regulation.