"Tax Benefits Reclaimed from Landlords Who Harm Tenants by Not Returning Deposits"

Mandatory Sub-Registration for Registered Rental Housing
Tax Reduction Recouped if Tenant Suffers Damage
Tax Arrears and Senior Security Deposits Must Be Disclosed in Lease Contracts

[Asia Economy Reporter Moon Jiwon] Starting from the 10th, registered rental housing must be indicated by a supplementary registration on the certified copy of the register as housing subject to compliance with the mandatory rental period and rent increase criteria.

Additionally, rental business operators must inform tenants of any tax delinquency status when concluding lease contracts, and if they cause damage to tenants by delaying the return of deposits, they will be required to fully repay any tax reductions received.

The Ministry of Land, Infrastructure and Transport announced on the 1st that the amendment to the "Special Act on Private Rental Housing," which includes these provisions, was approved by the Cabinet meeting and will be enforced on the 10th of this month.

First, registered rental housing must have a supplementary registration on the ownership registration so that prospective tenants and others can recognize that the housing is subject to public obligations. The supplementary registration can be applied for by visiting the registry office or through the Supreme Court Internet Registry Office.

Also, rental business operators must provide tenants with information regarding tax delinquency status and the status of prior-ranking deposits and other rights relations when concluding lease contracts. Violations will result in a fine of up to 5 million KRW. Until now, tenants often entered lease contracts without knowing the landlord’s tax delinquency status or prior-ranking deposit status, resulting in cases where deposits were not returned due to landlord bankruptcy, etc.

The government especially requires that for single-family, multi-family, and multi-unit houses where multiple tenants live in one building, rental business operators must provide prospective tenants with written information on prior-ranking deposits related to the housing at the time of the lease contract. Along with this, if rental housing rights relations are provided falsely or fraudulently, the mayor, county governor, or district head can revoke the rental business operator’s registration ex officio.

Furthermore, if a rental business operator delays the return of rental deposits causing damage to tenants, the mayor, county governor, or district head can ex officio cancel all or part of the rental registration. If the rental registration is canceled, the tax benefits previously granted to the operator will also be reclaimed.

If a rental business operator refuses to respond three or more times to local government requests for reports to verify unreported lease contracts or provides false reports, they may face registration cancellation.

There are also measures to reduce the burden on rental business operators. Previously, rental business operators had to pay out of pocket for appraisal evaluations to subscribe to rental deposit guarantees, but going forward, they can subscribe by submitting the publicly announced price or standard market price without undergoing an appraisal.

The conditions for rental business registration cancellation have also been revised. Previously, registration cancellation was allowed without restrictions if it was within one month after registration, but this period will be extended to three months. However, if there are contracts concluded after registration, the cancellation application requires the tenant’s consent to protect the trust of tenants who entered contracts knowing the housing was registered rental housing.

The reasons for canceling registered rental business without reclaiming previously granted tax reductions during the mandatory rental period have also been specified. ▲Cases where the private rental housing building is physically demolished due to redevelopment, reconstruction, etc., so that the previously registered rental housing no longer exists ▲Cases where the heir of the rental business operator refuses to succeed the operator’s status or falls under registration restriction reasons and thus cannot maintain the existing rental business qualification.

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