It was belatedly confirmed that an amendment to the Housing Lease Protection Act containing the proposal to extend the right to request renewal of a global lease contract to up to 9 years has been introduced. The law specifies that the landlord must provide the tenant with health insurance premium payment records and, if the home is sold, must also provide information on the new owner in writing.
The bill was jointly introduced by 10 lawmakers from the ruling Democratic Party of Korea and The Social Democratic Party of Korea, the Rebuilding Korea Party, and The Progressive Party, ahead of an unprecedented real estate measure before the Chuseok holiday.
According to the National Assembly's Bill Information System on the 15th, on the 2nd an amendment to the Housing Lease Protection Act was introduced to change the number of times the right to request renewal from 2 to a different number and to increase the lease term upon renewal to 3 years so that it can be extended up to 9 years. The bill also includes a provision that, to verify a landlord's ability to return the deposit in a jeonse contract, the landlord must provide not only national and local government tax payment records but also a health insurance premium payment certificate.
Han Chang-min of The Social Democratic Party of Korea led the proposal, joined by Yun Jong-gun of the Democratic Party of Korea, Jeong Chun-saeng of the Rebuilding Korea Party, Yeom Tae-young of the Democratic Party of Korea, Choi Hyuk-jin (independent), Yun Jong-o of The Progressive Party, Jeong Hye-young of The Progressive Party, Shin Jang-sik of the Rebuilding Korea Party, Jeon Jong-deok of The Progressive Party, and Son Sol of The Progressive Party.
The amendment contains many provisions that significantly strengthen the rights of jeonse tenants to prepare for jeonse fraud and non-return of deposits. Most notable is changing the current two-year lease term to three years and increasing the number of times the right to request renewal from once to twice so the renewal right can be exercised for up to nine years. This can be seen as an intention to overhaul the Housing Lease Protection Act.
There is also a provision to allow tenants to know the landlord's financial condition in detail and to require that, if the home is sold, information on the new owner be provided to the tenant.
The bill states, "By expanding the landlord's duty to provide information to include not only national and local government tax payment certificates but also materials that allow a comprehensive assessment of financial status, such as health insurance premium payment certificates, and by requiring that they be presented not only at the initial signing but also during the period between six months and three months before the end of the lease term, taking into account the period for exercising the right to request renewal."
It continues, "When transferring the leased dwelling, the landlord's status is succeeded by the transferee only if the landlord notifies the tenant in writing of information about the transferee; if the landlord fails to notify or if the tenant who receives the notice objects, the existing landlord's obligation to return the deposit remains in place."
The amendment also places limits on tenant deposits. The tenant deposit cannot exceed 70% of the sum of the deposit, senior collateral rights, and arrears of national and local government taxes. This means the deposit cap would be limited so that the deposit can be returned even if the house goes to a forced sale due to arrears.
It also includes a provision to move up by one day the time when a tenant's opposability takes effect, from 12 a.m. on the day after completing the move-in report and occupancy to 12 a.m. on the same day.
The lawmakers who took part in the amendment explained the reason for the proposal, saying, "Jeonse fraud and non-return of deposits continue to increase, but the current Housing Lease Protection Act does not properly reflect these changes," adding, "There are many scams that exploit loopholes in the law, so a comprehensive overhaul is needed."
However, in the market, there are concerns that if an amendment that comprehensively overhauls the jeonse market is implemented, tenants' housing insecurity could worsen. Since the renewal contract period would be longer, landlords are likely to significantly raise the initial jeonse deposit that serves as the baseline. It could also become more common for landlords or their families to temporarily occupy the home to remove existing tenants and bring in different tenants.
Park Hap-su, adjunct professor at Konkuk University Graduate School of Real Estate, said, "Upon renewal the tenant deposit can be raised by 5%, and if both the number of renewals and the term increase, homeowners will raise the initial jeonse price accordingly," adding, "As jeonse prices rise and conversion to monthly rent accelerates, overall housing insecurity could deepen."