"Is This a Communist Country?" Controversy Over Proposed 'Rent Freeze Law' for Sharing COVID-19 Burdens

'Rent Freeze Law'... Can It Solve the Pain of Self-Employed?
Government Intervention in Landlords' Property Rights... Criticism as 'Unconstitutional Bill'
Concerns Over Survival Rights of 'Small Building Owners'

A bustling street in Songpa-gu, Seoul. The photo is unrelated to specific expressions in the article. [Image source=Yonhap News]

[Asia Economy Reporter Han Seung-gon] Controversy is growing over the push for the so-called 'Rent Freeze Act,' which would prohibit landlords from charging rent during business suspension periods to protect self-employed individuals hit hard by the novel coronavirus disease (COVID-19). While there are opinions that tenants pushed to the brink should be helped, there are also concerns and criticisms that the bill is unconstitutional as it infringes on landlords' property rights.

On the 14th, Lee Dong-joo, a member of the Democratic Party of Korea, introduced a bill to amend the Commercial Building Lease Protection Act. According to the bill, landlords would be prohibited from charging rent (consideration for the use of leased property) to businesses subject to gathering bans. For businesses under gathering restrictions, landlords would not be allowed to charge more than half of the rent.

The bill also includes provisions allowing financial institutions to extend the repayment period or defer interest payments on secured loans for leased buildings, considering the economic burden on landlords.

This amendment was prepared with the intention of sharing the pain of small business owners and self-employed individuals who had to suspend operations due to gathering bans and restrictions amid the COVID-19 crisis. Four similar bills with the same purpose have already been submitted to the National Assembly.

Kim Tae-nyeon, Floor Leader of the Democratic Party of Korea Photo by Yonhap News

The ruling party plans to actively push forward with the bill. On the 15th, Kim Tae-nyeon, the floor leader of the Democratic Party, stated at a party strategy meeting, "The pain and burden on tenants are significant due to gathering bans and restrictions caused by COVID-19," adding, "We will gather opinions from stakeholders, civil society, and experts to devise a fair rent solution."

This came just one day after President Moon Jae-in mentioned at a senior secretaries meeting on the 14th, "It is very painful to question whether it is fair for tenants to bear rent burdens amid a sharp drop in sales." However, the Blue House drew a line by saying, "This is not directly linked to the president's remarks regarding the Rent Freeze Act."

There are also many counterarguments surrounding this issue. While there is sympathy for the pain of tenants such as small business owners during the COVID-19 situation, there are concerns that landlords' property rights could be excessively infringed. In particular, criticism arises over whether it is appropriate for the government to legally enforce this rather than leaving it to landlords' individual choices. There are also views that both tenants and landlords should be protected.

[Image source=Yonhap News]

Kim, a company employee in his 40s, said, "Everyone is struggling in the COVID situation; both tenants and landlords are having a hard time," and added, "It would be good if there were a bill that could satisfy all of them." For example, he pointed out, "If landlords suffer disadvantages to their property rights, they might even terminate contracts with tenants altogether," and said, "I don't think the state should manage property rights."

Park, a worker in his 50s, said, "I sympathize with the intention to help those struggling in the COVID situation, regardless of tenants," but criticized, "It does not seem appropriate to enforce this by law." He added, "Not all landlords are wealthy; some operate buildings jointly or are livelihood-type landlords."

On an online real estate-related cafe, criticism continues regarding this issue. One member strongly criticized, "Making a law that unconditionally forbids landlords from collecting monthly rent is like a communist country."

Another member opposed the bill, mentioning the gathering ban process. This member said, "Since the state ordered business suspension, the state should directly compensate for losses," and criticized, "It looks like the state is hiding behind landlords. It's not like tenants have to pay more rent if they earn more than usual."

Meanwhile, attention is also focused on the 'Rent Freeze Act' situations in other countries. It is characterized by simultaneously protecting tenants and landlords affected by COVID-19. In Canada, if landlords reduce monthly rent by 75%, the government supports 50% of the monthly rent. In Australia, if tenants prove a decrease in sales, landlords reduce or defer rent by that amount.

President Moon Jae-in [Photo by Yonhap News]

Meanwhile, the Democratic Party is reportedly starting internal reviews on measures to mandate rent reductions. There are even claims that the president's emergency financial decree authority is needed to enforce rent reductions.

Lee Dong-joo, the Democratic Party lawmaker who introduced the 'Rent Freeze Act,' said on MBC Radio on the 15th, "If COVID-19 accelerates further, we need to keep the option of (presidential emergency financial decree authority) open and consider it."

Woo Sang-ho, a Democratic Party lawmaker who officially declared his candidacy for Seoul mayor, advocated the introduction of the so-called 'Rent Cap Law' on YTN Radio that day, saying, "Foreign countries have systems that mandate rent reductions for people who cannot pay rent due to external causes."

Lee Sung-man, deputy floor leader of the Democratic Party, said on BBS Radio, "There is a lot of consensus within the party," and added, "I think it will gain momentum soon." Jang Tae-soo, spokesperson for the Justice Party, also commented, "Let's seek measures including immediate rent reduction through the president's emergency financial decree and financial support for landlords through meetings between the president and leaders of ruling and opposition parties."

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