New housing laws at center of criticism
Constitutional court asked to review validity of new laws
The revised housing lease laws which went into effect on Friday are drawing huge criticism from both landlords and tenants.
On Saturday, a group of law school students asked the Constitutional Court to review the constitutionality of the revision.
“The move is expected to create a shortage of jeonse flats in the housing market, which will mean a higher prices of jeonse properties in general,” the group said. “That will infringe rights to equality. It’s unfair that citizens should pay the price for the government’s failed policy. We see the move as unconstitutional and we view the court will agree with us.”
Two main pillars of the new laws are to prevent landlords from evicting tenants after two years by granting tenants the rights to stay on for another two years and to keep jeonse increases below 5 percent of the amount written on the leasing contract, if the landlord wants more money.
Jeonse is a unique housing leasing system in Korea where a tenant pays a large sum of money in advance, instead of paying monthly rent, to be returned when leaving. Landlords prefer it because they can receive a big chunk of money at once and so do tenants because the system helps them save money.
The revision particularly enraged landlords who viewed the move as an infringement on the right to private property.
On Saturday, they gathered on Yeouido in Seoul for a rally opposing the revision. The landlords had already been hit hard by tax increase proposals by the government. The acquisition tax, comprehensive real estate holding tax and transfer income tax for homeowners are expected to reach 12 percent, 6 percent and 72 percent, respectively.
The response from tenants was weaker, but they were also unhappy because the move is expected to create a shortage of jeonse properties in the market.
Speaking with the Hankook Ilbo, the sister paper of The Korea Times, a private citizen named Hong Chang-sik said he was already having difficulty finding a jeonse flat for himself and his newlywed wife to move into for November.
“We had to postpone the wedding until November because of COVID-19, but now my wedding plans have another stumbling block because of the revision,” Hong said.
Many real estate experts viewed the revision marks the beginning of the end of the jeonse system.
“Then, who will suffer the most? Most probably tenants,” Lee Changmoo, a professor at Hanyang University, was quoted as saying by
Joongang Ilbo.
Bringing skyrocketing housing prices under control has been the top priority for the Moon Jae-in administration. Despite a series of measures proposed and implemented, the government’s interventions have either had no effect or the opposite effect, and prices have continued to rise.
The housing crisis is felt more in Seoul and the metropolitan area where almost half of the Korean population lives.
According to Budongsan114, an online real estate trade site, the average apartment price in Seoul was more than 800 million won during the fourth quarter last year, up 40 percent from the first quarter in 2017.