[Exclusive] Struggling with Jeonse Shortage and Unpaid Balance... Hong Nam-gi Troubled by the Three Lease Laws (Comprehensive)

Tenant's Exercise of Lease Renewal Right Blocks Buyer Move-In
Mortgage Issues Delay Final Payment and Title Transfer
Similar Cases Lead to Owner's Actual Residence 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 for Economy and Minister of Strategy and Finance, is speaking at the 5th Committee on Strengthening Competitiveness of Materials, Parts, and Equipment held at the Government Seoul Office in Jongno-gu, Seoul on the 14th. Photo by Mo Honam munonam@

[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 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 also stuck in disposing of his property. Some voices are calling for additional supplementary discussions as the confusion has increased due to lax related systems.

According to Asia Economy's investigation on the 14th, the D apartment (exclusive area 97.1㎡) in Uiwang owned by Deputy Prime Minister Hong, which was contracted for sale at 920 million won in early August, has not completed the registration transfer even after more than two months due to delayed payment of the balance. 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. It is known that the tenant had planned to move to a nearby area but could not 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, who is having difficulty moving in due to the tenant's change of decision, is unable to pay the balance because of mortgage loan issues," adding, "Coordination is not easy."

The government newly designated Uiwang as a speculative overheated district in the previous June 17 real estate measures, requiring those who purchase apartments in the area with mortgage loans to move into the location within six months. In this sale contract, the buyer is unable to obtain a loan because moving in is impossible due to the tenant's intention to stay.

◆Deputy Prime Minister in a dilemma as he must also vacate his Mapo house= Hong, who faced controversy as a multiple homeowner owning the Uiwang apartment and a condominium pre-sale right in Sejong City, had tried to dispose of the Uiwang apartment to support the Moon Jae-in administration's real estate policies as the policy head. However, he is now experiencing difficulties in sales transactions and residence issues as a butterfly effect of the policies he oversaw. Hong is also in a position where he must vacate his jeonse house in Mapo-gu, Seoul, where he currently resides, due to the impact of the three lease laws. The landlord requested him to vacate the house, which expires in January next year, for actual residence purposes, but he has not yet found a jeonse house due to the rush of moving demand in autumn.

Although personally in a very difficult situation, 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 Seoul Government Complex in Gwanghwamun on the same day, he praised the government policy, saying, "The housing stability effect for existing tenants has begun to appear." Regarding the sharp rise in jeonse prices, he also said, "We take seriously the difficulties faced by those seeking new jeonse and will closely inspect and discuss the factors driving jeonse price increases with related ministries."

The market is concerned that the three lease laws, which were enacted without sufficient discussion and social consensus, will further exacerbate transaction confusion. In particular, cases like Deputy Prime Minister Hong's, where the buyer's financing or moving plans are disrupted by the tenant's decision during the sales contract process, have recently surged, and it is said that a premium of tens of millions of won has started 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 attached 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 a premium of tens of millions of won."

[Image source=Yonhap News]

◆Side effects of interference in private transactions... Bills strengthening new buyers' rights also proposed= As conflicts similar to Deputy Prime Minister Hong's case have occurred in various places since the enforcement of the three lease laws, some argue that institutional supplementation is necessary. On the 18th of last month, Kim Eun-hye, a member of the People Power Party, proposed an amendment to the Housing Lease Protection Act that allows existing tenants to be evicted if the house is purchased for actual residence. This amendment supplements the point that even if a contract is made for actual residence, if registration is not completed, the tenant's request for contract renewal cannot be refused.

In the field, it is pointed out that houses with tenants will become even harder to trade in the future. An industry insider said, "Although a bill allowing refusal of tenant renewal rights has been proposed, it is difficult to gain traction as it is an opposition party's opinion," lamenting, "There are many difficulties in proceeding with transactions of properties where tenants live." Especially, with the autumn moving season coinciding with a sharp rise in jeonse prices, there are many cases where tenants who planned to move are forced to reverse their decisions. In fact, posts on real estate study cafes mention frequent cases where tenants, aware of the sale, tried to move but could not find a suitable house and demanded the right to renew the contract.

Regarding this, Professor Shim Kyo-eon of Konkuk University's Department of Real Estate said, "Side effects have begun to appear as laws and systems have excessively interfered in private transactions," adding, "Protecting tenants' rights is a necessary measure, but the negative impact on society as a whole is much greater." He further stated, "Because it was pushed forward without sufficient review and pilot phases, inconvenience, losses, and controversies among market participants may expand in the future."

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