[Exclusive] Hong Nam-ki Hindered by Lease 3 Laws... Even Apartment Sales in Uiwang Blocked

Tenant's Exercise of Lease Renewal Right Blocks Buyer Move-In
Mortgage Issues Delay Final Payment and Title Transfer
Similar Cases Lead to Owner Occupancy Premiums of Tens of Millions Won, Not Based on Apartment Floor, Building, or Direction
"Adverse Effects of Excessive Legal and Institutional Intervention in Private Transactions"

Hong Nam-ki, Deputy Prime Minister and Minister of Economy and Finance, is delivering opening remarks at the "8th Real Estate Market Inspection Meeting of Related Ministers" held on the 14th at the Government Seoul Office in Jongno-gu, Seoul. Photo by Kang Jin-hyung aymsdream@

[Sejong=Asia Economy reporters Kim Hyunjung and Jang Sehee] Hong Nam-ki, Deputy Prime Minister and Minister of Economy and Finance, is facing a crisis in the sale of his apartment in Uiwang, Gyeonggi Province, which he sold to avoid controversy over multiple home ownership, due to the existing tenant exercising the right to renew the jeonse lease contract. Following the situation where he had to vacate a jeonse house in Mapo-gu, Seoul, as a result of policies he oversaw, he is now unable to dispose of his property.

According to Asia Economy's investigation on the 14th, the D apartment (exclusive area 97.1㎡) in Uiwang owned by Deputy Prime Minister Hong, for which a sales contract was signed in early August for 920 million KRW, has not completed the registration transfer as the payment of the remaining balance has been delayed for over two months. This is because the existing tenant, who had agreed to terminate the lease and move out at the time of the contract, claimed the right to renew the contract after about a month and expressed the intention to continue residing. The tenant had planned to move to a nearby area but was unable to find a suitable property due to the sharp rise in jeonse prices. The representative of nearby A real estate agency, which mediated the contract, said, "The buyer is unable to pay the remaining balance due to difficulties in securing a mortgage loan as the tenant changed their decision, making it impossible to move in," adding, "Coordination is not easy."

In the previous June 17 real estate measures, the government newly designated Uiwang as a speculative overheating district, requiring buyers of apartments in the area who receive mortgage loans to move into the property within six months. In this sales contract, the buyer is unable to move in due to the tenant's intention to stay, resulting in the inability to obtain a loan.

Hong, who faced controversy as a multiple homeowner for owning both the Uiwang apartment and a condominium pre-sale right in Sejong City, had attempted to dispose of the Uiwang apartment to support the Moon Jae-in administration's real estate policies as the policy chief. However, he is now experiencing difficulties in sales transactions and residency issues as a butterfly effect of the policies he oversaw. Hong is also in a position where he must vacate his current jeonse house in Mapo-gu, Seoul, due to the impact of the three lease laws. Although the landlord requested the house be vacated by January next year for actual residence purposes, he has yet to find a new jeonse house amid the autumn moving season demand.

On the 8th, the view of apartment complexes in Seoul city from the Seoul Sky observatory at Lotte World Tower, where Seoul apartment prices have been rising for the 18th consecutive week and Jeonse prices for the 67th consecutive week. According to the weekly apartment price trend announced by the Korea Real Estate Agency on that day, as of the 5th, Seoul apartment sale prices rose by 0.01% and Jeonse prices by 0.08%, showing only a 0.01 percentage point decrease compared to the previous week's increase. Photo by Hyunmin Kim kimhyun81@

Although personally in a very difficult situation, Deputy Prime Minister Hong recently gave an external evaluation that 'housing stability' is expanding in the jeonse market. At the 8th Real Estate Market Inspection Meeting held at the Government Seoul Office in Gwanghwamun, Seoul, he praised government policies, stating, "The housing stability effect for existing tenants has begun to appear." Regarding the sharp rise in jeonse prices, he said, "We take seriously the difficulties faced by those newly seeking jeonse and will closely examine and discuss the factors driving the rise in jeonse prices with related ministries."

The market is concerned that the three lease laws, which were implemented without sufficient discussion and social consensus, will further exacerbate transaction confusion. In particular, cases like Deputy Prime Minister Hong's, where the tenant's decision during the sales contract process disrupts the buyer's financing or moving plans, have recently surged, leading to reports that premiums of tens of millions of KRW are starting to be added mainly to properties where the owner actually resides.

A real estate agent in Seodaemun-gu, Seoul, said, "In the past, demand and prices varied by building, orientation, and floor within the same complex, but now premiums are being added based on whether the owner actually resides," adding, "To ensure stable transactions and minimize unexpected variables, houses without tenants are preferred even if it means paying tens of millions of KRW extra." Professor Shim Kyo-eon of Konkuk University's Department of Real Estate said, "Side transactions are now experiencing side effects as laws and regulations intervene excessively," pointing out, "Protecting tenants' rights is necessary, but the negative impact on society as a whole is much greater." He added, "Because the laws were pushed forward without sufficient review and pilot phases, inconvenience, losses, and controversies among market participants may increase in the future."

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