Starting August 28, real estate agents in South Korea will be required to confirm and explain the amount of shared management fees when facilitating rental contracts for one-room apartments and officetels.
The Ministry of Land, Infrastructure and Transport announced on August 11 that a partial amendment to the Enforcement Decree of the Real Estate Agents Act was approved during a Cabinet meeting, and the revised regulations will take effect on the same date.
This amendment follows the revision of the Real Estate Agents Act, which grants legal status to the Korea Association of Realtors, and aims to enhance transparency in management fees for small housing units.
With the legal recognition of the Korea Association of Realtors, the legal name 'Korea Association of Realtors' will be reflected in subordinate regulations, and provisions necessary for the operation of the association, including organizational management and executive composition, will be established.
As the association transitions from a voluntary organization to a legal entity, its existing charter will be systematically revised. Ethical regulations regarding professional conduct that members must adhere to will also be established with the approval of the Minister of Land, Infrastructure and Transport.
The obligation to confirm and explain management fees will also be strengthened. Previously, it was often difficult for tenants to verify management fee information for small housing units like one-room apartments and officetels, especially when there was no separate management entity. Concerns had been raised about excessive increases in management fees, which could circumvent rental costs, due to the lack of detailed information on expenses for common areas.
Going forward, real estate agents will need to confirm and explain the amount of shared management fees in addition to the total management fees. Shared management fees refer to the sum of costs that cannot be individually verified by household usage, excluding fixed costs such as TV reception fees and internet charges.
As instances of management fees being effectively used like rent in the rental market increase, the process of clearly verifying the structure of management fees before contracts can serve as a protective measure for tenants.
The method for determining brokerage fees for residential officetels will also be clarified. While brokerage fees for residential and non-residential properties are decided through consultation with clients within a set maximum rate, there had been confusion regarding the interpretation of the maximum rate for residential officetels.
The amendment clarifies that brokerage fees for residential officetels will also be determined through consultation between the client and the real estate agent. This applies to officetels with a dedicated area of 85 square meters or less, equipped with a dedicated kitchen, a dedicated flush toilet, and bathing facilities.
Shin Yoon-geun, Director of Land Policy at the Ministry of Land, Infrastructure and Transport, stated, “With the Korea Association of Realtors becoming a legal entity, we expect improvements in the qualifications and ethical awareness of real estate agents, allowing them to become a trusted institution for the public.”
He added, “This amendment to subordinate regulations will enhance consumer benefits by providing management fee information in advance during the housing lease contract process, and we will continue to identify areas for improvement for the development of the real estate industry and the benefit of the public engaging in real estate transactions.”
* This article has been translated by AI.
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