[Real Estate AtoZ] Is It Okay to Operate an Officetel as an Airbnb?

A view of an officetel in downtown Seoul. (Photo by Yonhap News)

[Asia Economy Reporter Ryu Tae-min] Recently, landlords struggling with vacancy issues are increasingly using houses and officetels as lodging facilities such as Airbnb. Although it varies by type, in cases of illegal operations, even if caught, the profits gained from lodging businesses are not confiscated or recovered. As a result, despite generating huge profits, the penalties are only light fines amounting to a few million won, which has become a problem.

In response, the Seoul Metropolitan Government's Civil Life Judicial Police Unit announced in October that it will intensively investigate professional operators conducting illegal lodging businesses using shared lodging platforms like Airbnb without business registration. The Civil Life Judicial Police are administrative officials responsible for crimes violating administrative regulations and are granted judicial police authority regarding investigations of specific administrative regulations, allowing them to enforce regulations more strictly than general city hall or district office officials. If caught operating an unregistered lodging business, one may face up to 2 years imprisonment or a fine of up to 20 million won under the Public Health Control Act.

Under current law, officetels cannot be used as lodging facilities. According to Article 2 (Definitions) of the Housing Act, officetels are quasi-housing, defined as buildings other than houses and their attached land that can be used as residential facilities. Therefore, officetels should only be used for partial lodging and office facilities, and operating a lodging business in them violates the law.

For urban-type residential housing, which was very popular last year, the use as lodging facilities depends on the type. First, ‘complex-type row houses’ with a floor area exceeding 660㎡ per building and ‘complex-type multi-family houses’ with a floor area of 660㎡ or less but not of the one-room type can be licensed as lodging facilities such as Airbnb. On the other hand, one-room types with an exclusive area between 14㎡ and 50㎡ cannot be used as lodging facilities.

General housing facilities such as apartments, detached houses, multi-family houses, and row houses can be used as lodging facilities if certain conditions are met. To do this, they must be registered as foreign tourist urban lodging businesses. Registration as a foreign tourist urban lodging business requires the business owner to reside in the house, install fire safety equipment such as carbon monoxide detectors in each room for guest safety, and the total floor area of the house must be 230㎡ or less. Additionally, after registration, Korean guests cannot be accepted; only foreign tourists may use the facility.

What if a tenant uses a rental house as an unregistered lodging business without the landlord’s consent and is caught? In some regions such as New York State and Florida in the United States, landlords have been fined large amounts due to tenants’ actions, but in Korea, landlords generally do not face penalties. In such cases, landlords can demand appropriate monetary compensation from tenants or request eviction through contract termination.