'Lease 3 Laws' Pass All Standing Committees in the National Assembly... Swift Progress Amid Opposition Walkout

If Passed in the Plenary Session on the 4th Next Month, Market Landscape Expected to Change
Lease 3 Laws Outline Emerges, Jeonse Prices Surge...Strong Backlash
Jeonse and Monthly Rent Reporting System to Be Implemented in June Next Year...System Development Needed

Yoon Ho-jung, Chairman of the National Assembly Judiciary Committee, is passing real estate-related bills including the amendment to the Housing Lease Protection Act during the plenary session of the Legislative and Judiciary Committee on the 29th, while members of the Future United Party have left the meeting. Empty seats of the United United Party members are visible behind the gavel. Photo by Yonhap News.

[Asia Economy Reporter Moon Jiwon] The 'Three Lease Laws' have passed all standing committees in the National Assembly.

On the 29th, the National Assembly's Legislation and Judiciary Committee held a plenary session and passed the amendment to the Housing Lease Protection Act, which includes the right to request contract renewal and the rent ceiling system among the Three Lease Laws.

Accordingly, the 'Three Lease Laws' promoted by the government and the ruling Democratic Party of Korea have all passed the standing committees. The amendment to the Real Estate Transaction Reporting Act, which introduces the monthly rent reporting system, was processed the day before.

The bill was processed smoothly on the day, just as the day before, with the Future United Party walking out. If these bills pass the plenary session of the National Assembly on the 4th of next month, the atmosphere in the lease market is expected to change significantly.

According to the amendment, the core of the Three Lease Laws is the right for tenants to reside for an additional two years once after the existing two-year contract period, and the rent ceiling system that prohibits rent increases of more than 5% upon contract renewal.

Initially, various proposals such as 4 years (2+2), 6 years (2+2+2), 9 years (3+3+3), and unlimited extensions were suggested for the contract renewal right system, but the previously discussed 2+2 plan was chosen.

This is interpreted as considering concerns that excessively broad recognition of tenants' contract renewal rights could excessively infringe on landlords' property rights. There were also concerns that if the lease period becomes too long, landlords might excessively raise rents at the time of new contracts.

The rent ceiling system limits the rent increase upon renewal to 5%, but allows local governments to set a lower limit within 5% based on their judgment. Therefore, in areas with significant rent increases such as Seoul and the metropolitan area, the ceiling may be set below 5%.

The standard rent system, where local governments set and announce appropriate rents for each region, was also discussed but excluded due to excessive administrative burden and expected strong opposition to the standard rent.

The contract renewal right can be exercised by existing tenants regardless of the number of extensions. In other words, even tenants who have already extended their contract once and lived for four years can claim the contract renewal right again.

Because of this, there is controversy among landlords about 'retroactive application,' but the ruling party and government intend to push forward, arguing that without it, landlords could excessively raise rents by accepting new tenants.

The government plans to allow landlords to refuse tenants' contract renewal requests if the landlords wish to reside in the property, considering the backlash against the Three Lease Laws.

If it is revealed that a landlord falsely refused the contract renewal right, the government is considering applying a 'statutory damage claim system' to make it easier for tenants to receive compensation.

Tenants can claim the larger amount among three months' rent at the time of contract renewal, the difference in rent for two years between the rent the landlord received from another tenant and the rent at the time of refusal, and damages incurred due to the refusal of renewal.

Unlike the rent ceiling system or the contract renewal right, the monthly rent reporting system will not be implemented immediately but will take effect on June 1 of next year. Initially, the ruling party and government planned to implement all Three Lease Laws simultaneously, but the reporting system's implementation was delayed due to the time needed to build the system.

From June next year, when the monthly rent reporting system is implemented, all lease transactions must be reported to the relevant local government within 30 days. The same applies when contracts are changed or terminated.

Once the rent ceiling system is implemented, all regional rent market information will be disclosed, and rental income tax bases can be verified to prevent tax evasion. However, since the implementation timing was delayed, there are concerns that the contract renewal right and monthly rent reporting system, which will be implemented first, may face difficulties.

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