Byun Chang-heum Administration, Real Estate Policy Changes 'Uncertain', Rather Strengthening Regulations

[Asia Economy Reporter Yoo In-ho] "We will proceed (with policies) in line with the current government's intention to actively promote housing supply expansion in various directions."

[Image source=Yonhap News]

On the morning of the 7th, Byun Chang-heum, the nominee for Minister of Land, Infrastructure and Transport, publicly revealed his policy direction.

Byun is expected to push forward major policy issues aimed at stabilizing housing prices and preventing the jeonse crisis without interruption and with speed.

The market is paying attention to whether he, who has a background in academia and has held key leadership positions in major real estate public corporations such as Korea Land & Housing Corporation (LH) and Seoul Housing & Communities Corporation (SH), can break away from the existing regulation-focused policies and present effective measures for the market.

However, some predict that considering Byun's past approach to the real estate market, it will be difficult to expect major policy changes.

◆ Redevelopment and reconstruction, easing regulations unlikely... Public role expected to expand = Byun stated in a phone interview with Asia Economy that he cannot "lift" regulations on reconstruction and redevelopment.

He explained, "The supply increase through reconstruction becomes the profit of apartments, and apartment prices rise in proportion to the profit, causing surrounding apartment prices to rise as well," indicating that regulatory easing is difficult because the ripple effect on the entire housing market appears immediately.

In this context, it is highly likely that the regulatory policies on maintenance projects will be maintained. Byun is negative about concentrating or monopolizing profits from real estate development to specific individuals.

This is why he criticized the New Town project promoted by former President Lee Myung-bak when he was the mayor of Seoul. In the 2015 co-authored book "Failed Policies," he pointed out, "The New Town project was implemented without specific policy goals or legal grounds, so the mechanism to recover development profits did not work, only raising housing prices and causing the loss of affordable rental housing."

◆ Supply expansion to be led by the public sector = The market consensus is that Byun's smooth landing depends on whether housing supply expands.

When Byun arrived at the Seoul Regional Land Management Office in Gwacheon Government Complex, Gyeonggi Province, and met with reporters, he said regarding housing supply, "We will expand housing supply in line with the policy intent," showing that housing supply is recognized as the key issue.

The market expects Byun's supply expansion measures to focus on rental housing supply through the development of the 3rd New Towns and station-area developments.

In fact, he emphasized, "The current government is actively setting multiple directions for housing supply expansion policies, so we will proceed accordingly," indicating that he will maintain existing government policies.

However, market experts say that it will be difficult to stabilize housing prices with public self-owned housing or existing policy directions that Byun has advocated. Professor Kwon Dae-jung of Myongji University Graduate School of Real Estate said, "It is difficult to stabilize housing prices with supply measures that demanders do not want."

◆ '3+3 years,' will stronger tenant protection laws emerge? = Tenant protection policies are expected to be further strengthened. Given Byun's track record, the protection of tenants' right to continued residence is likely to be reinforced.

Byun has emphasized the importance of housing welfare through contributions and papers while engaging in civic group activities. He argued that the current two-year lease contract period for tenants is harshly short and that a minimum of six years of residence rights should be guaranteed.

If the two-year lease contract period is maintained, he suggests a '2+2+2' system guaranteeing two renewals of the lease renewal request right, or alternatively, changing the lease period to three years with one renewal right, the '3+3' system.

Regarding the rent ceiling system, which currently applies a 5% cap at the first renewal, Byun stated in his 2014 book "What Did the Democratic Government Leave After 10 Years?" that "It is essential to establish an institutional foundation to guarantee tenants' rights," and advocated for "the establishment of lease renewal rights, rent ceiling systems, and rent review committees."

However, there is also a view that the likelihood of immediately pursuing such measures is low. The implementation of the three lease laws has already significantly reduced jeonse supply, accelerating the jeonse shortage. Therefore, in the short term, the government is expected to focus on enhancing the effectiveness of recently announced jeonse and monthly rent measures.

Seo Jin-hyung, president of the Korea Real Estate Society and professor at Gyeongin Women's University, said, "To stabilize the market, rather than tightening regulations further, there should be progressive policy changes such as regulatory improvements or supply expansion policies," adding, "He should revise his policy stance and present supply measures to curb soaring sales and jeonse prices, such as revitalizing reconstruction and redevelopment."

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