Rental Business Owner Raising Rent by 1086%... 3692 Cases of Mandatory Violations Massively Detected

Joint Investigation of Rental Business Operators from Sep to Dec Last Year
Cases Found Receiving Tax Benefits but Not Fulfilling Obligations
Joint Inspections from Jun to Dec This Year... Scope Expanded

[Asia Economy Reporter Moon Jiwon] #A, a man in his 50s from Yeonsu-gu, Incheon, registered a residential officetel, purchased for 150 million KRW, as a 5-year short-term rental type in April 2016 to receive an acquisition tax reduction benefit worth about 5.8 million KRW. He rented it to his nephew with a deposit of 10 million KRW, but when he took on a new tenant, he raised the rent to 'deposit 5 million KRW, monthly rent 450,000 KRW' (converted deposit about 120 million KRW), exceeding the previous rent by 1086%. The government imposed a fine of 5 million KRW on Mr. C for violating the 5% rent increase limit obligation and canceled the rental housing registration.

#Mr. B, a landlord in his 50s living in Seongdong-gu, Seoul, acquired an apartment worth about 600 million KRW in November 2017 and registered it as an 8-year long-term rental, but sold the property in May last year, less than three years later. Mr. A made a capital gain of about 400 million KRW from the sale. The government judged that Mr. A did not comply with the rental obligation period, imposed a fine of 30 million KRW, and canceled the rental housing registration.

#Mr. C, a landlord in his 60s from Jungnang-gu, Seoul, registered an apartment worth 320 million KRW in 2015 as a 5-year short-term rental and pretended to have tenants while actually residing in the rental property himself, receiving various tax benefits. The government imposed a fine of 10 million KRW for 'residing in the property during the rental obligation period,' canceled the registration, and notified the tax authorities.

The Ministry of Land, Infrastructure and Transport conducted a joint inspection with related agencies from September to December last year targeting registered landlords to check compliance with public obligations and disclosed the results on the 31st. This is the first time the government has promoted a joint inspection on compliance with public obligations of landlords, which had previously been managed at the local government level.

The rental registration system was introduced in 1994 to support housing stability for tenants living in private monthly rental housing. Landlords are subject to public obligations such as compliance with the rental obligation period and a 5% limit on rent increases, in exchange for benefits such as acquisition tax and property tax reductions, exclusion from comprehensive real estate tax aggregation, and reductions in capital gains and rental income taxes.

(Data from the Ministry of Land, Infrastructure and Transport)

The government detected 3,692 rental housing units violating public obligations in this inspection. By region, 1,916 units (51.9%) were found in the Seoul metropolitan area, where more than half (66.8%) of registered rental housing is located, and 1,776 units (48.1%) were found in other regions.

By housing type, violations were most frequent in apartments (1,421 units, 38.4%), followed by multi-family houses (915 units, 24.8%), multi-unit houses (335 units, 9.1%), and officetels (330 units, 8.9%).

For those found violating this time, local governments will impose fines and cancel registrations, and if necessary, notify tax authorities such as the National Tax Service and local tax departments.

The government plans to conduct a nationwide joint inspection of landlords' public obligation violations with local governments again from June to December this year. While last year's investigation focused on 'compliance with the rental obligation period,' this year will more broadly inspect rent increase limits and rental contract reporting.

A Ministry of Land official emphasized, "The government will continue to actively pursue various policies to protect tenant rights and strengthen post-management of registered landlords."

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