Landlord-Tenant Divide Deepens Again Over 'Rent Freeze Law'... Conflict Only Grows Larger

'Cheongwadae→Ruling Party→Government' Parachute-style Bill
Tenant Protection Needed but Method Problematic
'Landlord=Gap' Dichotomous Logic, Producing Side Effects

[Asia Economy Reporter Moon Jiwon] As the government and ruling party show movements to forcibly reduce commercial rent to support tenants struggling due to the spread of the novel coronavirus infection (COVID-19), market confusion is increasing. Experts explain that while policies to protect tenants are necessary, they should not be made in a way that demands sacrifice from one particular side, such as landlords.

In particular, concerns are raised that policies hastily pushed forward in a parachute style from 'Blue House → ruling party → government' without proper opinion gathering, as was the case with the new lease law that caused conflicts between landlords and tenants, may only exacerbate side effects.

Another Regulatory Bill Following the President's Words

According to sources inside and outside the National Assembly and government on the 16th, after President Moon Jae-in mentioned 'fair rent' on the 14th, the ruling party and government began to seriously consider measures to prohibit landlords from charging rent to small business owners in industries subject to business suspension or restrictions due to COVID-19.

Already, Lee Dong-joo, a member of the Democratic Party of Korea, proposed an amendment to the Commercial Lease Protection Act, known as the 'Rent Stop Act.' The bill stipulates that if the commercial facility is subject to a 'gathering ban' order, landlords cannot charge rent, and if it is under 'gathering restrictions,' rent should be reduced by half. Another member of the same party, Lee Seong-man, also proposed a bill in September to reduce rent by more than half if a 'gathering ban' is applied.

Within the industry, there are many opinions that measures are necessary given the significant damage to small business owners who cannot operate properly due to COVID-19. A petitioner who posted on the Blue House's public petition board titled "Why are only self-employed people the scapegoats in the COVID war?" appealed, "When a gathering ban is imposed, loan principal and interest, rent, utility bills for unused periods, and various tax payments should also be suspended," adding, "I have endured for 10 months by reducing my home and selling what I had. I am on the brink of death." The post received over 150,000 agreements within four days.

Concerns Over Side Effects of Lease Laws Repeating Due to Speedy Legislation

However, opinions are divided regarding the 'Rent Stop Act' led by the ruling party and government. This is because the government policy emphasizes only the sacrifice of landlords. Since the ruling party has a dominant position, when President Moon mentions the necessity, the ruling party and government proceed with rapid handling, leading to criticism that experts and other stakeholders' opinions are not properly gathered.

In the case of Lee Dong-joo's bill, it also includes benefits such as extending repayment for building mortgage loans only for landlords who reduce rent, but unless additional measures are prepared, damage to landlords' property rights is inevitable. Lee appeared on 'CBS Kim Hyun-jung's News Show' on the same day and said regarding the increased burden on landlords, "We are discussing with government authorities." This means the bill was proposed without initially considering appropriate support measures for landlords.

Seo Jin-hyung, president of the Korea Real Estate Society (professor at Gyeongin Women's University), pointed out, "Generally, landlords are thought to be the dominant party, but that is not always the case," adding, "Measures such as tax cuts for landlords or allowing rent increases when business performance improves should be prepared together to ensure mutual benefit. If only the tenant's position is overly emphasized, conflicts will inevitably increase."

A small-scale commercial landlord in Ulsan said, "I rented out with a deposit of 10 million won, but currently, 6.7 million won in monthly rent is overdue," adding, "I know the economy is bad, but during that period, loan interest has been paid regularly, and I am living like a beggar." In fact, looking at the vacancy rate trends of small commercial properties from the Korea Real Estate Agency, the vacancy rate for commercial spaces under 330㎡ nationwide increased from 5.9% in the fourth quarter of last year to 6.5% in the third quarter of this year, indicating that the burden on small landlords is also increasing.

There are also many criticisms that the government's continued dichotomous logic of 'weak vs. strong' exacerbates conflicts and side effects. The significant expansion of conflicts between landlords and tenants after policies such as the rent ceiling system, contract renewal request rights, and abolition of registered rental housing operators is in the same context. Considering that after these policies, jeonse (long-term deposit lease) prices surged nationwide, increasing housing burdens for ordinary people, there are concerns that the current 'Rent Stop Act' will also cause side effects such as landlords significantly raising rents later on.

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