Mokpo Private Rental Apartments' Deposit Increase Without Negotiation Sparks Tenant Outrage

Tenants Petition Against Excessive Increase in Rental Deposits

Construction Company States "Increase Aligned with Overall Inflation"

[Asia Economy Honam Reporting Headquarters, Reporter Jeong Seunghyun] Tenants are distressed as a construction company managing rental apartments in Mokpo, Jeonnam, raised the deposit without consulting the tenants.

Amid the severe impact of the COVID-19 pandemic on the local economy, tenants who received sudden notice of the deposit increase about a month before the lease renewal are now forced to take out additional loans, they say.

According to tenants of A rental apartments in Mokpo City on the 13th, construction company B recently confirmed a 4.4% increase in the rental deposit.

For this apartment, the lease renewal cycle is two years, and the increase amount is to be paid in a lump sum. Because of this, many tenants feel burdened by the deposit increase.

In response, tenants proposed an increase range of 3.5% to 4% through two meetings of representatives by building on the 10th and 26th of last month. However, construction company B reportedly rejected this and insisted on the original increase rate, notifying tenants to pay accordingly.

According to the Special Act on Private Rental Housing (Law No. 18452), when a tenants' representative meeting is formed for rental apartments, the landlord must negotiate the increase with the representatives. However, tenants complain that even this negotiation did not take place.

Given this situation, tenants submitted a petition to Mokpo City on the 10th titled "Opposition to Excessive Increase in Apartment Rental Deposits."

They stated, "Construction company B notified a confirmed 4.41% increase in the rental deposit and said the monthly rent of 80,000 KRW would be frozen for 8 years. However, the conversion rental deposit was notified without prior consent, and the actual increase rate exceeded 5.03%, violating regulations."

They added, "We judged the increase rate to be excessive and tried to negotiate, but construction company B refused."

Tenant C said, "To renew the lease contract, I have to pay about 9.7 million KRW more in deposit than now, so I am in a position where I have to take out a bank loan. Implementing the increase about a month before the lease renewal is a cowardly move that tightens the noose on tenants who have no financial leeway."

He also pointed out, "Our apartment has had inconveniences since the beginning due to vehicle license plate recognition issues with the entrance and exit barriers, but it has not been resolved even after two years. Broken tiles promised to be repaired as part of defect repairs are still left unattended."

Regarding this, construction company B explained, "Managing rental apartments incurs expenses such as housing fund interest and special repair reserve funds. We raised the deposit in line with overall inflation."

On the delay in defect repairs, they said, "Since we are repairing about 1,800 units only in Mokpo, delays are inevitable, but we will handle other defects as quickly as possible."

The reason for this rent increase appears to be the rise in the consumer price index in Jeonnam, which increased by 4.8% in May compared to the previous year (source: Honam Regional Statistics Office), relatively encouraging the deposit increase.

However, concerns are raised that if the deposit of private rental apartments, which aim to ensure housing stability, is significantly increased in line with inflation, it would not differ much from sale apartments, thereby increasing the financial burden on households.

A Mokpo City official stated, "We will listen to the positions of the rental business operator and tenant representatives and strive for an amicable resolution."