Landlords Raising Rent Over 5% in Crisis... Some Resort to "Rewriting Contracts" Tricks

Ministry of Land, Infrastructure and Transport to Conduct Joint Inspections on Rental Business Operators from July
Fines of Tens of Millions Won for Violating 'Rent Increase Restrictions'
No Exemption Even for Voluntary Reports... Busy Preparing Countermeasures
Ministry of Land: "Will Use All Means to Detect Violations"

[Asia Economy Reporter Moon Jiwon] As the government plans to conduct intensive joint inspections on housing rental business operators starting this July, a 'red alert' has been issued to rental operators who have not properly fulfilled their obligations so far. Some landlords are even attempting to 'erase evidence' by asking tenants to rewrite existing monthly or yearly lease contracts. There are even signs of collective action in response to the government's crackdown. However, the Ministry of Land, Infrastructure and Transport, the competent authority, reaffirmed its stance to use all means to detect illegal activities and impose strict measures.

According to the Ministry of Land, Infrastructure and Transport on the 25th, the government will conduct joint inspections with related agencies from July targeting registered rental business operators nationwide to check for violations of public obligations. Those registered as rental business operators receive various tax benefits such as comprehensive real estate tax, capital gains tax, and rental income tax, but in return must comply with a rental obligation period of up to 8 years and cannot increase rent by more than 5% annually.

However, the industry has long pointed out that many rental operators enjoy all the benefits while failing to properly fulfill their obligations to protect tenants. Accordingly, the Ministry of Land, Infrastructure and Transport decided that rental operators who violate minor matters and voluntarily report by June will be exempt from fines, but those who violate core obligations such as exceeding the rent increase limit will have their tax benefits revoked and be fined up to 30 million KRW.

The problem lies with landlords who have habitually charged rent exceeding the 5% annual increase limit. Since this is a core obligation violation, even voluntary reporting does not exempt them from fines. Because fines can reach tens of millions of KRW, these landlords are busy looking for ways to evade government crackdowns.

In fact, many landlords and tenants express their concerns about this issue on real estate-related online cafes. One rental business operator said, "I exceeded the 5% limit when changing a tenant who has lived here since October 2019 from monthly rent to a lump-sum deposit lease," adding, "I tried to rewrite the contract, but the tenant refused, so I am worried about the fine."

A tenant, Mr. A, living in Gangbuk-gu, Seoul, said, "Recently, the landlord has been repeatedly asking me to rewrite the previous lump-sum deposit contract with a higher deposit," and added, "I didn't even know the landlord was a registered rental business operator and had already increased the deposit, so it's absurd that they now want to rewrite the contract because of the fine."

The Ministry of Land, Infrastructure and Transport stated that even if rental business operators rewrite contracts to evade the crackdown, they can be sufficiently caught if there is other evidence such as confirmed dates or actual transaction reports. A ministry official said, "We plan to use all means to detect illegal activities," and added, "Especially, the creation of double contracts may result in increased fines depending on the judgment of the local government."

Some rental business operators have created 'countermeasure cafes' online to file collective complaints to the Ministry of Land, Infrastructure and Transport or request legal interpretations, preparing for full-scale action. This cafe has surpassed 1,100 members in about a month since its creation. On the 19th, a petition claiming that the fines are unfair was also posted on the Blue House's National Petition website.

The petitioner argued, "When registering as a rental business operator, I never received explanations or notifications from local government or tax office officials about the 'rent increase restriction,' which is a public obligation of rental business operators," and claimed, "Fines for failure to comply with the rent increase restriction reported during this voluntary reporting period should be exempted."

In response, a Ministry of Land, Infrastructure and Transport official said, "It is inappropriate to say that we did not kindly explain specific obligations while receiving all tax benefits," and added, "At this point, we are not considering plans to expand the scope of fine exemptions or change the schedule of joint inspections."

This content was produced with the assistance of AI translation services.