SEOUL, July 31 (Korea Bizwire) — Laws designed to protect tenants went into effect on Friday as the government seeks to enhance tenants’ rights in the face of rising home prices.
On Thursday, the National Assembly passed two of three bills aimed at protecting tenants.
The new legislation on housing leases will allow tenants to extend their two-year “jeonse” contracts for another two years. The first two-year contract has been guaranteed under the current law, according to the transport ministry.
After the 4-year contract period, landlords are able to raise jeonse deposits by up to 5 percent.
The 5 percent limit on jeonse prices could be lowered depending on policies of provincial governments. Owners of homes are allowed to refuse additional extensions if they move into their homes themselves.
Jeonse is a localized property lease system in which tenants pay a large deposit instead of monthly rent. It usually consists of a two-year contract, with the homeowner paying back the principal upon the completion of the contract.
Under the laws, if tenants want to extend their first two-year jeonse contracts by two more years, they are required to notify landlords of their intention to stay at least one month before the contracts end.
A third bill requiring landlords to report to the government actual rent prices didn’t pass the National Assembly. It is expected to be put up for a vote in a plenary parliamentary session scheduled for next Tuesday.
The government has announced 22 rounds of measures to stabilize the real estate market in the past three years, but the measures fell short of curbing home prices amid low interest rates and ample liquidity in the markets.
Earlier this month, the government announced its toughest measures yet to rein in rising housing prices, as a series of steps, including tax hikes and loan regulations, failed to put the brakes on soaring home prices.
Next week, the government plans to unveil a set of plans to supply more homes in the capital and neighboring areas.