National Assembly to Vote on Lease Protection Act Including 'Right to Request Rent Reduction' in Plenary Session on the 24th

[Image source=Yonhap News]

[Asia Economy Reporter Wondara] A bill allowing commercial tenants to request rent reductions from landlords due to the COVID-19 pandemic has passed the National Assembly. Landlords will no longer be able to request eviction or refuse contract renewal even if tenants fail to pay rent for more than six months.

On the afternoon of the 24th, the National Assembly will vote on the "Commercial Building Lease Protection Act Amendment" containing these provisions during the plenary session. This amendment combines proposals from Democratic Party lawmakers Jeon Yong-gi and Min Hyung-bae, and People Power Party lawmaker Chu Kyung-ho.

The amendment specifies "economic changes caused by a first-class infectious disease, etc." as grounds for requesting rent adjustments, allowing rent burdens to be eased. Accordingly, tenants struggling due to COVID-19 can request rent reductions from landlords. The amendment also includes a special provision that even if rent is overdue for six months, it will not be grounds for contract termination or refusal to renew. Under current law, rent overdue for three months can be grounds for contract termination (eviction) or refusal to renew. The amendment will also apply to existing lease contracts.

However, if landlords accept tenants' requests for rent reductions, the 5% cap on rent increases will not apply until the rent returns to the pre-reduction level. This reflects concerns that landlords might be reluctant to actively reduce rent due to the "5% increase cap" regulation introduced by the recent "Real Estate 3 Acts."

Meanwhile, even if the bill passes, there are criticisms that its effectiveness is limited since landlords cannot be forced to reduce rent. Democratic Party lawmaker Min Hyung-bae appeared on MBC Radio that day and said, "Because there is no compulsion, tenants can apply for this (the right to request reduction) to exert some pressure." He added, "There are mediation bodies widely available up to metropolitan governments that can mediate disputes." When asked if there is a set limit on how much rent can be reduced, he replied, "There is none."