Bills to revise the Housing Lease Protection Act that would let tenants hand a home over to auction if the landlord does not return the deposit after a monthly or jeonse lease ends are being repeatedly introduced. Until now, tenants could hand a home over to auction only with court approval, but the plan is to allow an immediate auction without that step.
Key bills would allow an auction application if the return of the deposit is delayed by only two to three months. As cases rise in which tenants do not get their deposits back due to jeonse fraud, the bills aim to strengthen their rights.
However, there are concerns that allowing a home to be sent to auction if the deposit is not returned within two to three months could cause turmoil in the jeonse market. Another proposal would impose fines of up to 10 million won on landlords or brokers (licensed real estate agents) who enter information in a lease contract that does not match the facts, drawing controversy.
According to the National Assembly on the 24th, on the 14th, 11 lawmakers including Yoon Jong-o of The Progressive Party introduced a partial amendment to the Housing Lease Protection Act. In addition to The Progressive Party lawmakers Yoon Jong-o, Jeon Jong-deok, Jeong Hye-kyung, and Son Sol, Hwang Un-ha of the Rebuilding Korea Party and Lee Ju-hee of the Democratic Party of Korea (deputy floor leader) took part.
Under the amendment, a tenant who has registered a lease (registration of a leasehold right) may send the home to auction if three months pass after the lease ends and the deposit (in part or in full) has not been returned. The bill also includes requiring a landlord who has not returned the deposit to pay delay interest on the unreturned deposit to the tenant.
Lease registration is set up when the landlord does not return the deposit after the lease ends. Once registered, the top-priority repayment right does not disappear even if the tenant moves out. If only a move-in report is filed, moving out without getting the deposit back causes the top-priority repayment right to disappear.
Earlier, on the 2nd of last month, 10 people including Han Chang-min, leader of The Social Democratic Party of Korea, also introduced a Housing Lease Protection Act amendment allowing a tenant to send a home to auction if the deposit is not returned within two months. The bill also included extending the standard term of monthly or jeonse leases from two years to three years and changing the number of times the right to request contract renewal can be used to two, allowing tenants to live under monthly or jeonse leases for up to nine years.
However, many argue that handing a home over to auction immediately after two to three months just because the deposit was not returned will bring market turmoil. Seo Jin-hyung, a professor in the Department of Real Estate Law and Administration at Kwangwoon University, said, "Finding a new tenant can be a little delayed, so deposit returns are often postponed," and added, "Resolving this by sending it to auction unconditionally would be an excessive infringement of property rights." Kim In-man, head of the Kim In-man Real Estate Research Institute, said, "Low-rise apartments where jeonse fraud occurs frequently will attract little interest in the auction market even if tenants send the home to auction, so there will be almost no successful bidders," adding, "Such bills will not help prevent low-rise apartment jeonse fraud and will instead only disrupt the apartment market."
There is also a push to toughen penalties for entering information in a lease contract that differs from the facts. The amendment proposed by lawmaker Yoon Jong-o's office would allow imposing fines of up to 10 million won on both tenants and brokers if false information is included in the contract.
In this regard, brokers are pushing back. They argue it is unreasonable to be punished when they have no authority to verify information. Kim Dong-soo, secretary-general of the Korea Association of Realtors(KAR), said, "In the field, landlords often provide incorrect information to brokers, but brokers have no way or authority to verify it," adding, "Imposing fines together on brokers who have no authority will be a considerable burden."
Lee Jae-yun, head of the real estate brokerage firm Jiptos, pointed out that there is a lot of information that brokers find hard to verify, such as deposits for multi-family dwellings. Lee said, "The seniority order of lease deposits for each unit in multi-family dwellings does not appear on the registry, and brokers have no authority to view it. The only person who knows this information is the landlord," adding, "Brokers need to know the deposit information of other units to judge whether a home is safe, but access to such information is restricted." Lee added, "Imposing only responsibility without the authority to access information would be an excessive sanction."