Ministry of Land, Infrastructure and Transport: "Registered Rental Housing Can Increase Rent by 5% Annually"

"Special Act on Rental Housing Takes Precedence Over Lease Protection Act" Interpretation Released

Archive photo / Photo by Mun Ho-nam munonam@

[Asia Economy Reporter Chunhee Lee] The government has determined that registered rental housing can increase rent by up to 5% annually. This interpretation is based on the special law, the "Special Act on Private Rental Housing," taking precedence over the Housing Lease Protection Act, which stipulates the right to request contract renewal and caps on monthly rent.

According to documents submitted by the Ministry of Land, Infrastructure and Transport (MOLIT) to Park Sang-hyuk, a member of the Democratic Party of Korea, on the 5th, MOLIT recently stated that registered rental housing can have one-year contracts if the tenant agrees, and rent can be increased by up to 5% upon contract renewal.

In the documents, MOLIT responded to Seoul City's inquiry asking, "The Special Act on Private Rental Housing is interpreted to allow one-year contracts with 5% increases. In this case, which law should be followed between the three housing lease laws and the Special Act?" MOLIT answered, "The Special Act must be followed," adding, "It is possible to contract on a one-year basis and increase rent within 5% of the previous rent only if the tenant agrees."

However, MOLIT added, "If the tenant does not agree to the contract period, it should be considered a two-year contract under the Housing Lease Protection Act."

Article 44 of the Special Act on Private Rental Housing stipulates that when requesting a rent increase, it can be raised within 5%. It also prohibits requesting an increase within one year after a contract or agreed increase.

Regarding this provision, MOLIT explained that registered rental housing can have one-year contracts and that a 5% increase is possible at each contract renewal. Some have argued that for one-year contracts, the increase should be interpreted as 2.5%, but MOLIT issued an authoritative interpretation allowing a 5% increase. If a 5% increase is possible annually, the two-year increase limit becomes 10.25%.

However, MOLIT clarified that this is based on "tenant consent." If the tenant does not agree, it is considered a two-year contract, and the rent increase limit is restricted to 5% over two years, MOLIT explained.

In the market, concerns are raised that MOLIT's authoritative interpretation could fuel increases in monthly rent prices. With a shortage of monthly rental listings causing prices to soar, some tenants of registered rental housing may be forced to accept landlords' one-year contracts reluctantly. According to the Korea Real Estate Board, as of the 28th of last month, the apartment monthly rent price index in Seoul has been rising for 66 consecutive weeks.

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