Reasons for Proposal
A. Introduce the right to contract renewal claim (2 years currently → 2, 2, and 2 years; 6 years in total) (Article 6-3, newly inserted)
Grant the right to contract renewal claim to the lessee to make sure the lessor cannot reject the lessee’s contract renewal claim unless there is a reason specified by law to do so and allow the lessee to exercise such right for the first two times and extend the contract period up to 6 years
Consider that there is a concern that rent and deposit may increase in a short period if it is under “the 3-year original contract plus 1 re-contract (3 + 3 years)” and aim to guarantee the contract period in line with 6 school years in elementary and middle and high school and improve residential stability during the school period
Allow for selecting a contract extension every 2 years while ensuring residential stability to obtain flexibility in move-in and -out in response to a variety of living and residential styles including an increasing share of one-person households
B. Introduce the upper limit for a rent or deposit increase linked to the income increase rate (Article 7)
Allow any agreed rent or deposit increase to not exceed the lesser of 5% or the percentage twice the annual average household income increase in the previous 3 years from the Survey of Household Finances and Living Conditions prepared and published by Statistics Korea under the Statistics Act
Identify a reasonable increase rate by linking with income and housing expense, considering that the “upper limit of 5% in a single increase” may perpetuate a 5% rent increase for every contract and that the “rent to income ratio” (RIR) in 2018 for lessee households is 22.2% and lessee households in the first income decile is 49.8%
C. Ban another increase within 2 years after any rent increase (Article 7 (2), newly inserted)
Ban another rent or deposit increase within 2 years after any lease contract or agreed rent or deposit increase to increase the lessee’s predictability and residential stability
D. Require the local government to disclose standard rent (Articles 8-3 to 8-5, newly inserted)
Require the competent local government, which can identify the situation in the local area most accurately, to calculate and disclose standard rent to narrow the information gap between lessor and lessee and ensure that it is used as the basis to calculate reasonable rent
Major Provisions
Obligate the lessor to not reject a contract renewal claim by the lessee without justifiable reasons (Article 6-3)
