[7·10 Real Estate Measures] Accelerating the 'Three Lease Laws'... How Will the Jeonse and Monthly Rent Market Change?

Jojong-sik "Legislation on Real Estate Tax Law and Related Matters to be Processed in July National Assembly"

(Photo by Yonhap News)

[Asia Economy Reporter Moon Jiwon] The ruling party and government have reiterated their stance to swiftly pass the so-called 'Three Lease Laws'?the Jeonse and Monthly Rent Reporting System, the Contract Renewal Request Right System, and the Rent Ceiling System?within this month, raising keen attention in the industry. If the Three Lease Laws are applied retroactively not only to new contracts but also to renewals of existing contracts as originally planned, the impact on the market is expected to be significant. The industry is already expressing concerns about a sharp rise in Jeonse prices before the laws take effect.

On the 10th, following the announcement of the 22nd real estate measures covering taxation, finance, and supply, the government and the Democratic Party of Korea decided to accelerate the passage of amendments to the Three Lease Laws to stabilize the Jeonse and monthly rent market. Cho Jung-sik, the Policy Committee Chair of the Democratic Party, told reporters after the Supreme Council meeting at the National Assembly that "the Democratic Party will handle related legislation, including real estate tax laws, in the July National Assembly session," adding, "The Three Lease Laws are included."

Once these laws are all passed, landlords and tenants will be required to report the deposit and lease period to local governments within 30 days after signing a contract. Regarding the contract renewal request right, various options have been proposed, but the leading plan guarantees a '2+2 year' term. Extending this period further is considered likely to excessively restrict landlords' rights. The rent ceiling system prohibits landlords from raising rent by more than 5% at the time of new contracts or renewals. This obligation, currently applied only to registered rental housing, will be expanded to general housing.

The Democratic Party has already completed all bill proposals for the Three Lease Laws, with the Jeonse and Monthly Rent Reporting System bill, led by Representative Park Sang-hyuk of the Democratic Party, being the last to be introduced on the 6th.

There are considerable concerns that the Three Lease Laws may excessively restrict landlords' property rights and distort the market. In particular, if the rent ceiling system is applied retroactively to existing contracts, landlords who previously offered relatively affordable Jeonse may face fairness issues, as it could take a long time to raise deposits to current market levels.

The market is already sensing a trend of landlords raising Jeonse prices ahead of the implementation of the Three Lease Laws. Many landlords who have already signed Jeonse contracts are considering evicting tenants and moving in themselves to reset the deposit. In this case, popular areas such as Gangnam and Mokdong in Seoul are likely to experience instability in the Jeonse market. The Korea Association of Realtors recently stated, "If the Three Lease Laws are introduced, landlords may become more selective in choosing tenants, which could further worsen the position of vulnerable parties."

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