'Suspicion of Illegality' in Registered Rental Housing: 40,000 Units Only in Songpa-gu... Will a Fine Crisis Occur?

Significant Scale of Suspected Cases Violating Obligations for Registered Rental Housing
Ministry of Land Recently Sent Investigation Targets to Local Governments Nationwide
Violation of Rent Increase Restrictions, Fines Up to 30 Million Won
Possible 'Fine Crisis' for Rental Business Operators Around Next Year

[Asia Economy Reporter Moon Jiwon] The government has recently sent a list of registered rental housing suspected of violating public obligations over the past five years to local governments nationwide. Some estimates suggest the number could reach hundreds of thousands.

Local governments plan to conduct investigations on the notified list by the end of the year and impose fines accordingly. Given the substantial number of cases under investigation, there are growing concerns that a "fine crisis" may occur among rental business operators next year.

According to the Ministry of Land, Infrastructure and Transport (MOLIT) and frontline local governments on the 25th, MOLIT sent lists of registered rental housing and rental business operators suspected of violating public obligations to local governments nationwide earlier this month. The suspects were identified through voluntary reports conducted from March to June this year and the rental registration system (RentHome).

The main suspected cases involve violations such as rental obligation periods, the 5% rent increase limit, and failure to report lease contracts. A MOLIT official stated, "We expect most violations to be related to the failure to report lease contracts."

Although MOLIT has not disclosed the exact scale, it is known that the number of cases under investigation is considerable. For example, in Songpa-gu, Seoul, which has the highest number of registered rental housing with about 59,000 households, the suspected obligation-violating houses sent by MOLIT amount to 40,000 households?roughly two out of every three rental houses. In terms of rental business operators, out of about 19,000, approximately 14,400 are under investigation.

Seocho-gu and Gangseo-gu, which also have many registered rental houses, reportedly received investigation lists of about 40,000 households each. Nationwide, it is analyzed that the number of suspected obligation-violating houses could reach hundreds of thousands. As of early this year, before the registered rental housing system was effectively abolished, there were 1,569,000 registered rental houses and about 511,000 rental business operators nationwide.

A MOLIT official said, "There appear to be a significant number of houses suspected of violating public obligations," but added, "The exact number of violations can only be confirmed after receiving investigation results from local governments." Local governments will conduct written and face-to-face investigations on these cases by the end of this year. If violations are confirmed through the investigation, full-scale fines are expected to be imposed starting next year.

Currently, violations of the lease contract reporting obligation carry fines of up to 10 million KRW, while violations of the 5% rent increase limit and rental obligation period compliance can result in fines up to 30 million KRW.

However, there is also a possibility that investigation procedures may be delayed depending on the local government. This is because some local governments are overloaded due to a higher-than-expected number of suspected cases. In fact, local governments are currently organizing voluntary report items and carrying out rental business operator cancellations following the amendment of the Private Rental Housing Special Act on the 18th of last month, but recently received investigation lists numbering up to tens of thousands, causing work overload.

A local government official in Seoul said, "We have to obtain explanations from each individual regarding violations, but it is such a massive task," adding, "No matter how many staff we add, we cannot keep up."

Although joint investigations have not yet been fully conducted and some duplicate cases are known, given the large number of suspected violations, the final number of fines imposed and the total amount are expected to be substantial. On online cafes where rental business operators gather, complaints are pouring in, saying, "The government did not properly promote the obligations until now, and suddenly conducting investigations and indiscriminately imposing fines is unfair."