[Editorial] Tenants of Rental Apartments Are Being Evicted

One of the Korean government’s housing policies is to increase rental home supply continuously even by mobilizing pension funds for homeless people. However, there are too many cases in this country in which tenants of existing private rental apartments are kicked out to the streets, losing their down payments. That is because construction companies that built private rental apartments went bankrupt one after another due to the sluggish real estate market and as a result, rental apartments are put up at auction en masse.

According to a real estate information company, as many as some 15,000 private rental apartment households saw their entire apartment complexes put up at auction this year alone. The Korea Rental Apartments’ League even presented an estimation that the number of bankrupt rental apartments stand at 400,000 households. After a rental apartment is sold at auction, tenants usually are evicted and lose a lion’s share of their down payments, equivalent to their entire assets.

In order to protect such vulnerable poor people, the government should support a smooth process in which tenants can buy the rental homes they are living in, if there are no specific reasons for disqualification. The government should also purchase private rental homes and utilize them as public rental houses. The government says that the budget is lacking for that, but that cannot be an excuse under the circumstance in which it is planning to invest pension funds to build more rental homes. A simple increase in the number of rental housings would not help the general public, especially at a time when tenants of existing rental homes are evicted to the streets.

The government introduced a number of policies to freeze the real estate market, under the pretext of stabilizing housing supply for the general public and narrowing the gap between the rich and poor. However, the result is that ordinary people living in rental apartments and temporary construction workers living from hand to mouth, not the real estate rich in Gangnam area, bear the brunt.

The government decided yesterday to lift the designation of speculation-prone area from 11 areas and to delay the implementation of registration system of actual real estate transaction price. But such band-aid measures are not likely to lead to a revitalized real estate market. It is time for the government to draw up additional complementary measures to revive the construction industry while avoiding speculation at the same time.