Controversy Over Lease Law Continues... Government Says "It Has Been Operated Abroad for a Long Time"

Germany, Unlimited Lease Contracts Are Common
France Also Allows Practically Unlimited Extensions
Standard Rent System Under Review by Ministry of Land

View of the city center from the 63 Building in Yeouido, Seoul. Photo by Moon Honam munonam@

[Asia Economy Reporter Moon Jiwon] As market distortions have increased, such as the rapid rise in jeonse prices due to the implementation of the contract renewal request system and the rent ceiling system, the government stated that "major overseas countries have long been operating these systems."

On the 11th, the Ministry of Land, Infrastructure and Transport explained, "Major overseas countries such as Germany and France have long operated contract renewal request rights and rent control systems," and "although the definitions and details such as the duration of lease contracts vary by country, contract renewal request rights are often operated in an effectively unlimited form."

According to the Ministry, in Germany, indefinite lease contracts are common, and in France, the principle is three years, but contracts cannot be terminated without just cause, effectively operating as unlimited extensions. New York in the United States recognizes contract renewal request rights under the Rent Stabilization Law.

In the UK, as social problems such as a significant deterioration in tenants' housing stability due to deregulation have increased, discussions are underway recently, centered on London, to allow tenants to reside for the desired period.

The Ministry also explained that the rent ceiling system is often applied not only to renewed contracts but also to new contracts in major advanced countries.

In Germany, as rents surged mainly in large cities such as Berlin and Cologne, regulations were established in March 2015 to prevent rents in new contracts from exceeding 10% of the surrounding market price.

France introduced the rent reference index system in 2005 to limit rent increases within the index limit upon contract renewal, and since 2015, has enforced laws regulating rents for new leases in Paris.

In the United States, last year, the 'Housing Stability and Tenant Protection Act' strengthened regulations to maintain the initial preferred rent for tenants during their residence.

The Ministry emphasized, "After long discussions, we also introduced the contract renewal request system and the rent ceiling system," adding, "By limiting the rent ceiling within 5% upon contract renewal, tenants can be relieved from worries about rapid rent increases."

The Ministry also left open the possibility of introducing a standard rent system. The Ministry explained, "We are reviewing the necessity of introducing a standard rent system by referring to advanced overseas cases," and "no government policy has been finalized."

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