The possibility is growing that using the renewal request right will realistically extend the jeonse contract period to up to nine years. The broader pro-government camp plans to push ahead with the lease law amendment bill introduced earlier this month as is. The bill's core is to extend the jeonse period to three years and allow two uses of the renewal request right.
In all of Seoul and 12 areas of Gyeonggi Province designated as land transaction permit zones under the Oct. 15 measures, housing transactions are extremely restricted, raising concerns that home prices could be pushed up. However, within the Democratic Party of Korea, given the strong public criticism of the Oct. 15 measures, the party is showing a lukewarm response to the bill.
According to ChosunBiz reporting on the 24th, the 10 lawmakers who on the 2nd introduced the Housing Lease Protection Act amendment plan to hold a press conference on Nov. 5 to explain the rationale for the bill. Although criticism has intensified since the bill's details became known, this is seen as an attempt to push through head-on.
The bill was led by Han Chang-min of The Social Democratic Party of Korea, with Yoon Jong-goon 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), Yoon Jong-oh 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 joining. In the case of Yoon Jong-oh, last December the lawmaker led the introduction of a Housing Lease Protection Act amendment that would allow tenants to use the jeonse contract renewal right without limit, but withdrew it after public backlash grew stronger.
An aide in Han Chang-min's office said, "There is no intention to withdraw the bill," adding, "It is one of the measures needed to block jeonse scams and 'empty-can' jeonse problems."
In the market, there are concerns that this amendment bill, combined with the Oct. 15 measures, will sharply raise not only jeonse prices but also home prices. If the jeonse period is locked in at nine years, landlords will face restrictions on selling their homes. This is because actual occupancy by the buyer is mandatory in permit zones. As a result, the number of listings coming to market could decrease, pushing up home prices.
In the jeonse market, as the renewal contract period gets longer, the initial jeonse deposit that serves as the benchmark could rise significantly. Also, to remove existing tenants and accept new ones, it may become more common for the landlord or family members to temporarily move in. This is because when an existing tenant exercises the renewal right, the rent increase rate is capped at 5%.
A licensed real estate agent in Seoul said, "If the amendment goes into effect, in permit zones it would be impossible to sell a home for the nine years a tenant is living there," adding, "Jeonse prices as well as home prices will rise as supply is constrained, and I expect property rights infringement issues to flare up."
The lawmakers who introduced the amendment say the bill's purpose is to prevent jeonse accidents, but that public criticism is too strong. The bill includes measures such as a jeonse loan-to-value cap to prevent jeonse accidents, expanded provision of landlord information, granting the right to request an auction, preventing "straw" landlords, and a small-amount tenant system. People's Solidarity for Participatory Democracy also issued a commentary saying the media is focusing only on the extension of the contract period and is excessively criticizing the amendment.
An aide in Han Chang-min's office said, "We need to look at the overall context, including jeonse scams and damage from 'empty-can' dwellings, but it seems the level of criticism focused only on the jeonse renewal right is too excessive."
However, within the ruling Democratic Party of Korea, the mood is that this lease law amendment is unlikely to pass the National Assembly. As the party is focused on dealing with the fallout from the Oct. 15 measures, it would be difficult to push the amended law hard. It is also understood that discussions have not yet been held with the competent standing committee, the Legislation and Judiciary Committee.
Yeom Tae-young, a Democratic Party of Korea lawmaker who co-sponsored the bill, said, "There is meaning in Representative Han introducing the bill, and the intent is to take a look from the perspective of better protecting tenants," but added, "I think it will not be easy for it to be implemented in this National Assembly."
An official with the Democratic Party of Korea's Policy Committee said, "It seems discussions in the Legislation and Judiciary Committee, the standing committee, will have to wait until the November budget season ends," adding, "It appears individual lawmakers from the party asked for co-sponsorship and it was given."