In her 30s, Ms. Lee moved into an apartment in Hongje-dong, Seodaemun-gu, Seoul, on a jeonse lease last May and has been living there. But less than a year after moving in, she received a demand to vacate from the owner. The owner put the dwellings up for sale due to the burden of the heavy capital gains tax and said a prospective buyer was demanding immediate occupancy, asking for understanding and offering 10 million won for moving expenses and consolation money. After holding out by saying, "I won't leave," Lee, after much deliberation, found a new jeonse place and signed a written pledge to vacate.
With the reinstatement of the heavy capital gains tax on multiple-home owners about 50 days away, the number of tenants like Lee receiving sudden requests to vacate is growing. Landlords, who must somehow get tenants to move out due to the tax burden, are in a bind as well. They are sweating to persuade tenants to leave by adding consolation money on top of moving expenses.
According to the brokerage industry on the 19th, conflicts have been increasing recently between owners rushing to dispose of dwellings before their contracts expire and tenants who had in mind renewing their leases. An employee at a certified real estate agency in Hongje-dong, Seodaemun-gu, Seoul, said, "Multiple-home owners are eager to sell dwellings quickly and have no leeway to consider tenants' situations, and from the tenants' perspective, their homes can disappear overnight, so conflicts are flaring up everywhere."
The government allowed the new owner (the buyer of the dwellings) to postpone moving in until the existing tenant's lease ends, but many still want to occupy the property immediately upon acquisition due to reasons such as lending regulations. The employee said, "If the tenant has already taken out a jeonse loan using the dwellings as collateral, the buyer can only take a junior loan for the difference after subtracting the jeonse deposit from the loan limit calculated by applying the LTV (loan-to-value ratio, 40% in a regulated area)," adding, "There have been cases where buyers demanded tenants move out because they couldn't get the loan."
There are also many cases where landlords say they will sell the home they lived in and move into rental dwellings. A staffer at a brokerage in Gireum-dong, Seongbuk-gu, said, "When the owner plans to live in the home, the tenant cannot exercise the right to renew the contract. Documents like a confirmation of termination of the dwellings lease contract are not needed, so it is easier to have the tenant move out, and quite a few multiple-home owners choose to live in the home themselves." In land transaction permit zones, an obligation to occupy the property is imposed when purchasing dwellings, so the land transaction permit and the tenant's written pledge to vacate must be submitted together to the district office.
Tenants facing eviction are often demanding large consolation payments or refusing to show the home, and such cases are countless. On online real estate communities, posts are appearing such as, "I'm not answering the landlord's calls and I'm not reading texts asking to show the home," and, "Just hold out. Isn't it better for us if it doesn't sell because we won't show the home?" The staffer said, "While it's understandable from the perspective of tenants hit by a bolt from the blue, quite a few are refusing contact not only from the landlord but also from the broker," adding, "Under current law, tenants are not obligated to show the home, so reaching an amicable agreement with moving expenses is ultimately the best option. Recently, there was a case where a landlord paid 20 million won to a tenant."