Will Prospective Homeowners Living in the Property Be Able to Refuse Tenants' Lease Renewal?

Representative Kim Eun-hye of the People Power Party Leads Proposal
Scheduled for Judiciary Committee Today... If Passed, Goes to Plenary Session

[Image source=Yonhap News]

[Asia Economy Reporter Moon Jiwon] A bill allowing prospective homeowners who purchase a house for actual residence to reject the existing tenant's 'right to request contract renewal' is being discussed in the National Assembly's Legislation and Judiciary Committee.

According to the National Assembly on the 18th, the Legislation and Judiciary Committee is scheduled to hold a plenary meeting to submit the amendment to the Housing Lease Protection Act, which was introduced by Kim Eun-hye, a member of the People Power Party. The amendment is intended to supplement the lease law that came into effect on July 30. If it passes the committee, it will be submitted to the plenary session.

Currently, even if a house is purchased for actual residence, unless the registration is completed, the existing tenant's exercise of the contract renewal right cannot be rejected. Since the period between contract and registration in typical housing sales can take several months, there have been many concerns that this regulation could cause unintended harm to good-faith parties.

In the actual lease market, despite being genuine buyers, some are unable to move into the purchased house and have to look for monthly rent options, or they carry out ownership transfer registration before the final payment to avoid the regulation, causing side effects. Additionally, criticism has arisen that buyers are avoiding properties with jeonse (long-term deposit lease), which is further suppressing normal sales transactions.

The amendment mainly adds the condition that the transferee who newly purchases a house for actual residence can reject the tenant's contract renewal request. According to materials submitted to Assemblywoman Kim by the Legislative Research Office, countries like the UK and France also stipulate that contract renewal requests can be rejected when the house is to be sold.

Since the government and ruling party are currently passive about the amendment, it is expected that passing it will not be easy. The Ministry of Justice also expressed in its review report on the amendment that "the contract renewal right system could be undermined, and it is difficult to verify the buyer's actual residence purpose, which may increase confusion in lease relationships."

However, since Lee Nak-yeon, leader of the Democratic Party, acknowledged the government's failure in real estate policy by saying "I am heartbroken and sorry" about the recent jeonse crisis at a Kwanhun Club discussion the day before, there is a possibility that Assemblywoman Kim's supplementary legislation could gain the ruling party's consent.

Kim's office emphasized, "Despite the significant side effects caused by legislative deficiencies, the government has repeatedly shown complacency by relying only on legislative interpretation," adding, "It is practically neglecting the situation where numerous victims cannot move into their own homes."