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Commercial Building Lease Protection Act is revised only in favor of tenants

Commercial Building Lease Protection Act is revised only in favor of tenants

Posted September. 24, 2020 07:41,   

Updated September. 24, 2020 07:41


Upon the agreement at the Legislation and Judiciary Committee on Wednesday, the ruling and opposition parties will pass the revision bill of the Commercial Building Lease Protection Act, which grants the tenant affected by COVID-19 with the right to request rent discount, at a regular session of the National Assembly today. The bill is intended to reduce the rent burden of small-business owners whose sales have dwindled.

The revision bill of the Commercial Building Lease Protection Act includes the right of the tenant to request rent discount from the commercial building owner in the case of a change in economic situations caused by a first-degree infectious disease, etc. In addition, the first six months of the enactment of the bill shall not be considered as rent overdue period. Commercial building owners are able to evict tenants who have failed to pay rent for three months by law, but the effect of this provision will be on pause for the second half of this year to prevent such evictions.

It is necessary for the government to come up with measures to address small business owners’ concerns about rent. However, conflicts between landlords and tenants who interpret the six-month exemption from rent overdue period as a ground to not pay rent for six months are unavoidable. If tenants pay the overdue rent later as his or her financial situation improves, there might be fewer issues. However, if the situation gets worse leading to the closure of businesses, landlords who haven’t received rent can make the government liable.  

Although the ruling Democratic Party of Korea tried to add a mandatory provision that does not allow the landlord to refuse the rent discount request by the tenant, the provision was omitted due to the objection of the opposition People Power Party. If it had been enacted as the ruling party wanted, the bill would have been criticized for violating the property right of the landlord by forcing their losses and causing conflicts between the landlord and the tenant by siding with the latter.  

The revision bill was put forward based on the claim by some politicians that it is only the tenant, not the landlord, who is negatively affected. However, it varies among different landlords. There are many cases that landlords are struggling because of the lack of tenants and high financial expenses. The proper way to encourage the “good” behavior of the landlord is increasing tax benefits for landlords who provide rent discounts.

The South Korean society is experiencing intense conflicts between the landlord and the tenant since the haphazard enactment of thee major housing lease laws. When politics are involved in the private sector, side effects are bound to happen. The same mistake should not be repeated for the Commercial Building Lease Protection Act.