'COVID-19 Damage' Commercial Rent Reduction Demand Act Passed in National Assembly Plenary Session

On the 24th, the "Partial Amendment to the Commercial Building Lease Protection Act" was passed at the plenary session of the National Assembly. Photo by Yoon Dong-ju doso7@

[Asia Economy Reporter Kim Hyemin] The amendment to the 'Commercial Building Lease Protection Act,' which reduces the burden of commercial rent for tenants affected by the novel coronavirus infection (COVID-19), has passed the National Assembly.

On the afternoon of the 24th, the National Assembly held a plenary session and approved the bill with 224 votes in favor, 8 against, and 20 abstentions out of 252 members present.

The amendment includes provisions allowing commercial tenants who suffered damage due to Level 1 infectious disease quarantine measures such as COVID-19 to request rent reductions from landlords. When landlords reduce rent and later increase it again, the '5% cap rule' will not apply.

The amendment does not specify a minimum threshold for requesting rent reductions. However, it also does not include a mandatory clause requiring landlords to unconditionally accept tenants' reduction requests.

Additionally, rent arrears incurred during the first six months after the law's enforcement will not be grounds for contract termination or refusal to renew the lease.

The National Assembly explained the background of the passage, stating, "Due to the impact of COVID-19, commercial tenants' sales and income have sharply declined, and rent has become a significant burden on their business activities. This amendment aims to alleviate the rent burden by imposing temporary exceptions that limit landlords' contract termination rights during economic crisis situations."