Kim Eun-hye Proposes Bill to Legally Allow Contract Renewal Refusal for Actual Residence Buyers

Kim Eun-hye, member of the People Power Party. [Photo by Yonhap News]

[Asia Economy Reporter Chunhee Lee] A bill has been proposed to include 'purchasing a house for actual residence' as a reason to refuse the renewal request of an existing tenant's contract.

On the 18th, Kim Eun-hye, a member of the National Assembly Land, Infrastructure and Transport Committee from the People Power Party, announced that she has proposed a partial amendment to the "Housing Lease Protection Act" to allow a buyer who has signed a sales contract for a house to refuse the renewal request of the existing tenant if the buyer intends to actually reside in the house.

The proposed amendment includes adding "when the transferee who newly purchases a house signs a sales contract for the purpose of actual residence" to the reasons for refusal of contract renewal requests stipulated in Article 6-3 of the current law.

Kim referred to this bill as the "4-year Gap Investment Prevention Act." This appears to be aimed at the statement made by Minister Kim Hyun-mi of the Ministry of Land, Infrastructure and Transport at the Land Committee plenary meeting on the 11th, who said, "(Even if the house was purchased for actual residence) under the current law, (the buyer's residence) is not allowed," and "the sales transaction will change based on the premise that the lease period has been extended to 4 years."

The recently amended Housing Lease Protection Act specifies as a reason for the landlord's refusal to renew the contract that "the landlord (including the landlord's direct ascendants and descendants) intends to actually reside in the target house," but confusion in the market is gradually increasing over the interpretation of this provision. Depending on the order of the contract renewal request period, the exercise date of the contract renewal right, the sales contract date, and the ownership transfer registration date, there are interpretations that actual residence is not possible even if the house was purchased for actual residence.

Kim pointed out that "According to the June 17 real estate measures, apartment owners with properties worth over 300 million won face restrictions on jeonse loans, and victims who cannot move into their own houses are blocked from renting a new residence," and "also, victims who purchased houses in regulated areas such as Seoul and Gyeonggi with mortgage loans must move into the house within six months, but even this may become impossible, indicating serious problems with the current law."

Kim added, "Under the pretext of stabilizing the real estate market, the hastily passed three lease laws have been met with public outcry less than two months after implementation," and "starting with this amendment, we will restore abnormal real estate policies back to normal."