The Lease Act Sparks an 'Era of Jeonse Confusion'... Government and Ruling Party Say "No Plans for Amendments"

Collapse of Power Balance Between Lessor and Lessee... Roles Switch Every 2 or 4 Years
Deputy Prime Minister Hong: Double Compensation Possible for Buyers Due to Tenant's Contract Renewal Right Exercise
Opposition Party "Receiving Damage Reports... Will Prepare Alternative Legislation"

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 18 consecutive weeks and jeonse prices for 67 consecutive weeks. 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@

[Sejong=Asia Economy Reporters Kim Hyun-jung, Jang Se-hee, Moon Je-won] #Office worker Kim, who finally signed a jeonse apartment lease contract in Seoul after searching for over three months, ended up paying more than 50 million KRW above the initially planned price. At the landlord's request, Kim submitted documents such as a certificate of employment, which are usually unnecessary for contracts, and out of concern for being seen as a difficult tenant, was unable to include even a single special clause in the contract to guarantee minimal rights.

#Park, who owns an apartment in Suwon, Gyeonggi Province, rented out a newly completed apartment as a jeonse at about 200 million KRW below market price. However, the tenant began negotiating moving expenses and brokerage fees ahead of the contract expiration in March next year. The tenant initially promised to move in January but then changed their mind. Starting from financing arrangements, all of Park's schedules and plans became disrupted.

The revised Lease Protection Act, which significantly strengthens tenants' rights, is distorting Korea's unique rental market centered on jeonse contracts. The government abruptly disrupted the long-standing balance of power between landlords and tenants that has supported the jeonse system for years. The government and ruling party have stated that they are not considering alternative legislation or supplements to resolve the conflicts emerging across the market.

According to real estate industry sources on the 15th, more than two months after the implementation of the Housing Lease Protection Act (Lease Act), which includes the right to request contract renewal, confusion is intensifying in rental, lease, and sales markets. A typical example is tenants who initially decided to move out at the end of their lease but then reverse their decision to exercise the right to renew the contract, triggering problems like those faced by Park. Even Hong Nam-ki, Deputy Prime Minister and Minister of Economy and Finance, who oversees related policies, is reportedly facing a similar situation where a sales contract for an apartment in Uiwang, Gyeonggi Province, is at risk of falling through.

In the real estate brokerage market, it is becoming common for tenants to demand moving expenses ranging from several million to tens of millions of KRW as a condition for vacating the property without issues. The head of a brokerage office in Jongno-gu, Seoul, said, "Tenants have recently started to bring up moving expenses very naturally. In the past, this was only mentioned when landlords were at fault or breached contracts, but now both parties accept it without much discomfort." 'Gapjil' behavior?abusing superior contractual positions?is also seen among landlords. For example, lining up dozens of prospective tenants in front of the house, effectively turning it into an interview scene, or demanding documents proving income and employment status are not uncommon. A real estate industry insider said, "Because the tenant's identity is becoming increasingly important in lease contracts, landlords are becoming more demanding to reduce uncertainty. However, since the power dynamic flips every two or four years, uncomfortable situations may become more frequent." On internet real estate forums, complaints such as "Landlords might have to find tenants' next jeonse homes for them" are even appearing.

Hong Nam-ki, Deputy Prime Minister for Economy and Minister of Economy 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@

The possibility of lease contract disputes escalating into lawsuits also appears high. In cases like Deputy Prime Minister Hong's sales contract conflict, if unexpected tenant rights exercises prevent obtaining a mortgage loan, the buyer can demand double the deposit as compensation from the seller, Hong. Attorney Kim Ye-rim of Jeonghyang Law Firm explained, "The seller must deliver the property without any rights restrictions, but if the tenant does not vacate, it is essentially a breach of contract. Depending on the agreement, disputes may arise, but typically double deposit compensation can be demanded, and it may lead to litigation."

Despite the anticipated major confusion among stakeholders, the government and ruling party say they are not considering additional legal measures to address the recent market turmoil. A Ministry of Land, Infrastructure and Transport official said, "Together with the Ministry of Justice, we are monitoring the trend and content of complaints, and if there are interpretation issues, we distribute additional explanatory materials and expand dispute mediation committees. However, legislative amendments are not being discussed." The official added, "Most complaints are about tenants exercising the right to renew contracts, making it difficult to sell homes. While tenants reversing their initial decisions are generally not recognized, it is difficult to know all the detailed developments in discussions."

The opposition party is collecting cases of market confusion to prepare comprehensive alternative legislation that protects landlords, tenants, and buyers alike. Song Seok-jun, a former Ministry of Land official and member of the People Power Party's Special Committee on Real Estate Measures, said, "Since the implementation of the three Lease Acts, various damage cases have occurred in the market. We are continuously receiving reports of such cases at the party level and plan to analyze them by type to prepare alternative legislation."

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