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Temptation of rent ceiling

Posted June. 17, 2017 07:26,   

Updated June. 17, 2017 07:26


Famous singer Suzy began to be called as Korea’s first love after she appeared in the movie titled "Architecture 101." Suzy played the younger version of female protagonist "Seo-yeon" in the movie. After living at a relative's house in Jengreung, northern Seoul, Seo-yeon moved to a semi-basement flat in Gaepo-dong, southern Seoul. She appears before Seung-min, the male main character who became an architect, 15 years later and asked him to build a house for her in Jeju. The lease system in Jeju is unique in that tenants pay the entire amount of monthly rental fees for 1 year at once and the term of contract is one year. People in Jeju call the lump sum payment as the money that disappears. That is an example of different lease systems among regions.

Kim Hyun-mee, minister-nominee of land, infrastructure and transport, testified before the confirmation hearing at the National Assembly Thursday that she moved six times and bought a small house in Gyeonggi Province 11 years after getting married. Kim also said that she held back her tears by watching bright lights of apartments at night and still pays back her bank loans. It appears that she experienced her share of grief as a tenant. She presented her plan as the land minister to adopt housing policies such as rent ceiling and tenant’s right to claim the lease renewal. The Minjoo Party has been requested to introduce such plans to curb rising house prices and the People’s Solidarity for Participation Democracy and other civic groups agree with those plans.

It is regarded that landlord has the power and tenant is the weak. Hence, the housing policy in Korea focuses on protecting the tenant, the weak party, as the minister-nominee indicated. However, there are also many cases that landlord is also tenant. According to the 2010 survey on national population and housing, 2.68 million households, or 16 percent of the total, turn out to be both landlords and tenants, and the number is expected to have been further increased in 2017. I wonder whether the two-faced public is for or against such policy.

Housing acts in advanced countries such as the U.S., France stipulate not to increase rental fees for current tenants. In Japan, landlords cannot force tenants to move out after the term of contract expires. Under the Housing Lease Protection Act of Korea, the existing lease agreement automatically renews for another two years unless landlord informs tenant of leaving the house empty within a given period. However, we should be aware that rent ceiling or other similar regulations are past remains that were briefly adopted during poor housing market situation right after the world war and abolished soon. It is time for Minister-nominee Kim to wake up from a naïve dream that a policy of good will be destined to succeed.