9 Billion Apartment Brokerage Fee '8.1 Million → 4.5 Million'... Government Proposal Released

[Image source=Yonhap News]

The government has unveiled three reform proposals for real estate brokerage fees. If the government’s plan is finalized, brokerage fees for housing transactions in the 900 million to 1.2 billion KRW range are expected to be significantly reduced.

The Ministry of Land, Infrastructure and Transport (MOLIT) and the Korea Research Institute for Human Settlements announced on the 16th that they will hold an online forum at 2 p.m. on the 17th to gather diverse opinions from the public, associations, academia, civic groups, and consumer organizations regarding the "Improvement Plan for Real Estate Brokerage Fees and Brokerage Services."

Due to the recent increase in real estate prices, brokerage fees have risen sharply, significantly increasing the burden on the public, leading to strong demands for improvement. Accordingly, MOLIT has been preparing improvement plans through research projects and other means.

The Anti-Corruption and Civil Rights Commission recently proposed a rate revision plan, and MOLIT, together with the Korea Research Institute for Human Settlements, separately created and disclosed three proposals. According to MOLIT’s proposals, the current rates will be maintained for transactions under 200 million KRW, while the upper limits of the rates vary slightly among the three proposals for higher price brackets.

First, Proposal 1 sets a brokerage fee rate of 0.4% for transactions between 200 million and 1.2 billion KRW, and up to 0.7% for amounts exceeding 1.2 billion KRW, with negotiable terms. Proposal 2 applies upper limit rates of 0.4% for 200 million to 900 million KRW, 0.5% for 900 million to 1.2 billion KRW, 0.6% for 1.2 billion to 1.5 billion KRW, and 0.7% for amounts above 1.5 billion KRW. Proposal 3 applies 0.4% for 200 million to 600 million KRW, 0.5% for 600 million to 1.2 billion KRW, and 0.7% for amounts exceeding 1.2 billion KRW.

Proposal 1 favors consumers, Proposal 3 favors licensed real estate agents, and Proposal 2, which is intermediate, is reported to be the most likely to be adopted. If Proposal 2 is finalized, the maximum brokerage fee for a 900 million KRW home transaction will drop from the current 8.1 million KRW to 4.5 million KRW, roughly half. For a 1.5 billion KRW property, the brokerage fee will decrease from 13.5 million KRW to 10.5 million KRW, and for a 2 billion KRW property, from 18 million KRW to 14 million KRW.

Regarding lease contract brokerage fees, all three proposals lower the maximum rate from 0.8% to 0.6%, and reduce the upper limit rate for the 300 million to 600 million KRW range from 0.4% to 0.3%. For amounts under 100 million KRW, the current rates remain unchanged.

MOLIT will also pursue improvements in brokerage services alongside these changes. Measures under consideration include abolishing the current total compensation limit system and guaranteeing fees per brokerage transaction, as well as establishing a real estate brokerage mutual aid association.

In particular, the option to set a minimum passing number for the licensed real estate agent qualification exam is being reviewed. The exam is multiple-choice and currently has no minimum pass limit, but this would impose such a limit. Additionally, plans to regulate the number of brokerage assistants proportionally to the number of licensed agents or to ensure that the total number of assistants does not exceed the number of licensed agents are also under consideration.

Interested citizens can watch the forum live on YouTube and freely express their opinions via comments. MOLIT explained, "Based on the discussions at the forum, we plan to finalize and announce improvement measures promptly to reduce the burden on the public."