Both Landlords and Tenants Welcome Relaxed Primary Residence Rules...Preemptive Prevention of 'August Lease Crisis' [June 21 Real Estate Measures]

As the "Lease 2 Laws," which include the cap on jeonse and monthly rent and the right to request contract renewal, mark their two-year implementation anniversary at the end of July, concerns about instability in the rental market are growing. In response, the government has taken steps to secure rental housing supply by easing the "actual residence obligation."

The real estate measures announced by the government on the 21st are broadly divided into reforms of the pricing method for pre-sale housing and stabilization plans for the rental market. Among these, the easing of the actual residence requirement has been welcomed by both landlords and tenants, and it is expected to contribute to market stabilization by increasing the supply of jeonse and monthly rental listings.

To increase jeonse listings, the government plans to extend the deadline for disposing of existing homes for those receiving mortgage loans in regulated areas and to relax the residence obligation under the pre-sale price ceiling system.

First, when obtaining a mortgage loan for the purpose of purchasing a home in a regulated area, the deadline for disposing of the existing home will be extended from the current 6 months to 2 years.

Additionally, the obligation to dispose of the existing home and move into the new home will be abolished to encourage new homes to be supplied as rental properties.

The actual residence requirement for the first occupant of homes subject to the pre-sale price ceiling system will also be eased for up to five years from the initial move-in date.

Currently, depending on the pre-sale price level relative to the market price, an obligation of 2 to 5 years is imposed immediately from the initial move-in date. Going forward, the actual residence period only needs to be fulfilled until the home is transferred, inherited, or gifted, rather than immediately.

The actual residence obligation for pre-sale price ceiling system homes has been applied since February 19 of last year for complexes that applied for resident recruitment approval following the 2020 amendment of the Housing Act and the 2021 revision of the enforcement decree.

The government has also expanded the scope of recognition for "win-win landlords." Currently, only one-household-one-home owners with homes valued at 900 million KRW or less at the start of the lease are recognized as win-win landlords. Going forward, multi-homeowners who plan to convert to single-home ownership will also receive benefits. This is intended to prevent landlords from evicting tenants to fulfill the actual residence requirement and to encourage restraint in raising rental prices.

Furthermore, "win-win landlords" who voluntarily limit rent increases to within 5% until 2024 will not have to pay capital gains tax when selling their homes even if they do not fulfill the actual residence requirement. They will also receive a long-term holding special deduction of up to 80%.

Moreover, since the rental market is linked to the sales market, there are calls to promptly introduce measures to stabilize the sales market alongside the rental market stabilization measures.

Lee Eun-hyung, a research fellow at the Korea Institute of Construction Policy, said, "Because the rental market is connected to the sales market, stabilizing the rental market separately has its limits. It is also necessary to effectively realize other policy measures such as increasing housing supply in the sales market."