The amendment to the Housing Act, which postpones the mandatory residence obligation for apartments under the price ceiling system for three years, passed the National Assembly Land, Infrastructure and Transport Committee plenary session on the 27th.
The Housing Act amendment approved at the Land Committee plenary session on that day mainly relaxes the start of the mandatory residence obligation from the 'earliest possible move-in date' to 'within three years after the initial move-in.'
The mandatory residence obligation requires those who apply for apartments subject to the price ceiling system to live in the apartment themselves for 2 to 5 years from the move-in date. It was introduced in 2021 to curb 'gap speculation,' where buyers purchase homes with jeonse (long-term deposit leases) amid an overheated real estate market.
However, as the sales market cooled from the second half of 2022, the Yoon Seok-yeol administration announced the abolition of the mandatory residence obligation along with easing restrictions on resale of apartment pre-sale rights in the 1.3 measures last year. Since then, the bill had been pending in the Land Committee for over a year due to opposition from the Democratic Party of Korea.
With the passage of the amendment, homeowners will be allowed to lease their apartments once on a jeonse basis before moving in. However, considering that the typical jeonse contract period is two years, the 'three-year grace period' may cause conflicts between homeowners and tenants in the future. Therefore, experts advise clarifying whether tenants can exercise their right to renew contracts and the allowable residence period.
Meanwhile, the Land Committee also passed an amendment to the Building Act that relaxes the penalty reduction rate for illegal buildings from the current 50% to 75%.
The ruling and opposition parties are expected to process the bill at the plenary session scheduled for the 29th.
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