Reasons for Proposal
As the housing supply rate in Korea is 104.2% as of 2018, the issue of a lack of housing has been addressed to some extent. However, the housing supply rate in the Seoul Metropolitan Area is lower than that in other cities and provinces, and especially, the rate in Seoul stands at 95.9%.
The ratio of rent to income continues to increase among the low-income group due to an imbalance of supply and demand in the housing lease market, and it is becoming an important issue to prepare some measures to stabilize housing for working-class people.
In particular, considering Korea’s reality that half of the households, mostly working-class people, reside through lease contracts such as deposit-based lease or monthly rent, recent instability problems in the housing lease market such as a declining quantity and rising price of deposit-based leases and the acceleration of transition into deposit-based lease or monthly rent increase the burden on people’s residential costs and undermines housing stability. It is urgently needed to fix the system to stabilize lease households and the lease market.
Hence, this Act aims to introduce the right to contract renewal claim like other advanced countries such as the US, Germany, the UK, and France, ban rent or deposit from being raised above a certain level, limit such right to the current level of commercial building leases by allowing a contract renewal claim only 1 time within 4 years, and stabilize housing for working-class people while minimizing its impact on the lease market.
Details
A. Require anyone who leases his/her house in whole or in part to the other person to register the lease with the head of Si/Gun/Gu within 1 month after entering into the lease contract and declare any change or renewal of the lease contract within 1 month thereafter (Articles 2-2 through 2-4 newly inserted)
B. In an effort to promote residential stability for the lessee, allow the lessee to exercise the right to renew a lease contract one time and specify the annual rent increase upper limit as 5% (Articles 6-3 and 7)
C. Remove regional and monetary limits on the scope of the lessee whose deposit can be reimbursed first and foremost, and expand the scope of protection by specifying the amount of a deposit reimbursable first and foremost as 2/3 of the house price (including the site thereof) (Article 8)
Major Provisions
Article 6-3 (Right to contract renewal)
