National Assembly Land, Infrastructure and Transport Committee Comprehensive Audit of Ministry of Land, Infrastructure and Transport
Kim Hyun-mi "Worried about Ultra-Low Interest Rate Situation"
"Agree on Expanding Tax Credit... Will Discuss"
Minister of Land, Infrastructure and Transport Kim Hyun-mi is responding during the comprehensive audit of the Land, Infrastructure and Transport Committee held at the National Assembly in Yeouido, Seoul, on the morning of the 23rd. (Photo by Yonhap News)
[Asia Economy Reporter Moon Jiwon] Kim Hyunmi, Minister of Land, Infrastructure and Transport, expressed concern over the growing jeonse instability following the Bank of Korea's base interest rate cut.
On the morning of the 23rd, during the comprehensive audit of the Ministry of Land, Infrastructure and Transport held by the Land, Infrastructure and Transport Committee at the National Assembly, Minister Kim responded to the Democratic Party lawmaker Park Sanghyuk's remark that "the biggest cause of the current jeonse market instability is the historically low interest rates," saying, "We are also worried that the prolonged ultra-low interest rate situation is having a very significant impact on market instability."
On that day, Rep. Park said, "Jeonse prices started to rise after the Bank of Korea began cutting interest rates in the second half of 2019," adding, "In fact, jeonse prices sharply increased starting from the first half of this year."
He emphasized, "It is a historical fact that whenever the Bank of Korea lowered interest rates considering US-led rate cuts or economic stimulus, jeonse prices inevitably rose."
Rep. Park added, "(The Lease Protection Act is) only one cause of jeonse instability, and rather, existing tenants have been able to live stably for two more years thanks to the right to request contract renewal, despite landlords having incentives to raise deposits due to the interest rate cuts."
In response, Minister Kim said, "Although we have not yet accumulated enough data to disclose internal materials, what we have confirmed is that cases of contract renewal requests are increasing and rent increase rates are also decreasing."
Earlier, the Ministry of Land, Infrastructure and Transport also explained through a press release that the recent sharp rise in jeonse prices was due to the Bank of Korea's base interest rate cuts rather than the Lease Protection Act.
Minister Kim also stated that they would consider measures to reduce tenants' burdens by expanding monthly rent tax credits in the future.
Minister Kim said, "I agree that reducing tenants' burdens through tax credits and other means is important," adding, "This issue requires consultation with the fiscal authorities, so we will work together on this."
However, "Basically, data on the entire lease market must be secured so that tenants are not excluded and can receive benefits," she said, "I expect that once the lease reporting system is implemented and settled in June next year, reasonable taxations on rental income and tax credits will be possible."
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