"The homes the government expects to see on the market are not vacant houses, but rental properties currently occupied by tenants," said Chung Chang-yeop, president of the Korea Housing Lease Association.
As the government increases tax burdens on multiple homeowners to encourage them to sell their properties, Chung argues that rental business operators should not be viewed solely as subjects of regulation but recognized as a crucial part of housing supply to alleviate the financial burden on tenants in the rental market.
In an interview with Aju Economy on August 21 at the association's office in Seocho-gu, Seoul, Chung stated, "Registered rental housing was structured to receive tax benefits in exchange for fulfilling obligations to ensure housing stability. If these benefits are reduced or eliminated, it will inevitably undermine policy trust. The regulations on rental business operators could ultimately impact tenants negatively."
Chung's primary concern is the potential decrease in the supply of rental properties due to a reduction in registered rental housing. While the government aims to encourage the sale of properties by increasing tax burdens on multiple homeowners, this could lead to existing rental properties being converted into owner-occupied homes, resulting in a decrease in rental supply. He argues that an increase in supply in the sales market could paradoxically lead to a reduction in the rental market.
"It is crucial to remember that the homes the government expects to see on the market are not vacant houses but rental properties currently occupied by tenants," he emphasized.
Chung noted that tenants who have been living at lower rents due to rent increase restrictions may face significant burdens when they need to relocate. He explained, "Registered rental housing has adhered to obligations such as a 5% rent increase limit. If tenants who cannot afford higher rents are forced to move unexpectedly, it could create serious issues."
He further explained that some registered rental properties, which have been subject to long-term rent increase restrictions, may see a significant rise in housing costs if existing tenants are evicted during the sale process, given the widening gap between market rents and the rents they have been paying.
Chung pointed out that if the government retroactively reduces the tax benefits initially offered at the time of registration, it may become challenging to attract market participants even if the government later introduces policies to expand the supply of rental housing. Changing the benefits that were provided in exchange for adhering to rent restrictions and mandatory rental periods could also lower policy predictability.
He expressed greater concern about the non-apartment rental market. Following the recent rental fraud incidents, demand for jeonse (long-term lease) has decreased, and stricter requirements for guarantee insurance have accelerated the shift to monthly rentals. If landlords face increased burdens, the cost for vulnerable housing groups could rise even further.
Chung stated, "The serious impact of rental fraud has made new tenants hesitant to enter into lease agreements, and after the guarantee deposit non-refund incidents, the requirements for guarantee insurance have tightened, speeding up the transition to monthly rentals. Since vulnerable housing groups tend to reside more in non-apartment settings than in apartments, their housing cost burden is increasing."
While he agrees on the need for safeguards to prevent rental fraud, he cautioned that if even legitimate rental business operators are driven out of the market, it could weaken the supply base. He emphasized the need to consider both tenant protection and stable rental housing supply.
Chung stressed that before encouraging rental business operators to sell their properties, the government should assess whether the market environment is conducive to actual sales. The timing of lease agreements and the sale of properties may not align, and in areas requiring land transaction permits, buyers may face restrictions due to occupancy obligations.
He remarked, "Even if one intends to sell, properties tied up in land transaction permit areas with tenants are not easy to sell. There is a growing situation where the government encourages sales, but in reality, it is difficult to sell even if one wants to."
Chung argued that the perception of landlords needs to change from viewing them merely as individuals owning multiple properties. It is essential to distinguish between curbing speculative demand from multiple homeowners and recognizing the role of private rental housing supply.
He stated, "We should not view landlords solely as subjects of regulation but also as entities supplying housing to the rental market. For tenants to have stable living conditions, landlords must be able to operate their rental businesses securely."
Chung also emphasized the importance of including the voices of market participants, such as landlords and tenants, in the policy-making process. It is crucial to examine how policies operate in practice with the stakeholders involved, beyond merely considering whether to strengthen regulations.
He concluded, "The market participants are the ones directly affected by policy impacts, yet their voices are often not adequately represented. If we are discussing rental market policies, we must listen to both landlords and tenants and reflect their perspectives in the policy and legislative processes."
* This article has been translated by AI.
Copyright ⓒ Aju Press All rights reserved.