Increase cheonsei rent by easing real residence obligations, and fundamental review of the Lease 3 Act
Minister of Land, Infrastructure and Transport Won Hee-ryong said that he would present a reorganization plan next month, pointing to the sale price ceiling system as the first system that needs to be tweaked to promote housing supply. It is expected to open the door to the supply of housing in the city center by making the sale price a reality by reflecting the recent surge in raw material prices and union moving costs.
In addition, he announced that he would prepare a supplementary plan for the 3rd lease law, which is concerned regarding side effects, in June, two years before its enforcement in July of this year. In the short term, it is expected that the landlord’s obligation to live in the new apartment building will be eased to increase the amount of cheonsei rentals, and in the mid to long term, the 3 Lease Act will be fundamentally reviewed.
○ “The price ceiling system, the system that needs to be addressed first”
Minister Won held his first press conference following taking office in Sejong City on the 23rd and said, “If there is a factor that everyone can’t help but agree with, such as an increase in the cost of moving materials or raw materials, artificially pressing the price can have side effects.” . The sale price ceiling system is a system that controls the sale price at 70-80% of the surrounding market price by calculating the housing land cost and construction cost, and is currently applied to most areas in the metropolitan area, including Seoul. In 2020, under the Moon Jae-in administration, the upper price ceiling system was applied to private as well as public housing sites, and it has been considered as one of the factors blocking the supply of housing in downtown areas.
Minister Won said, “In order to promote supply (the price ceiling system), the excessively rigid parts will be improved in line with market movements.” This seems to be the intention of reorganizing the construction cost or additional cost to be linked to the market price. In this case, the increase in presale prices can improve the profitability of reconstruction and redevelopment and speed up the business. However, it may stimulate the surrounding house prices and thus limit the rationalization of the standard.
Regarding the first-phase new town development, he said, “We will first prepare migration measures and master plans tailored to the characteristics of each region in the aging complexes in the metropolitan area,” he said.
Minister Won acknowledged the net function of multi-homeowners and announced that he would ease restrictions on multi-homeowners. He said, “(The Moon Jae-in government) ignored the role of multi-homeowners and uniformly regulated according to the number of houses, resulting in side effects.” Regarding the criteria for multi-homeowners, he said, “There is a basic view that we should go with the housing price (rather than the number of houses),” he said.
○ Landlords likely to increase jeonse rentals by easing the obligation to live in the house
Minister Won said, “We will also come up with a short-term supplementary plan for the 3rd rental lease law within June.” He said, “When (the landlord) receives an apartment with a price ceiling system for sale or receives a mortgage, the property is sometimes locked because of the obligation to live in the house.” It is expected that the landlord’s residence obligation applied to most new apartment buildings in the metropolitan area will be relieved, and the obligation to move in within six months, which is applied when receiving a mortgage, is also expected to be relaxed. In this case, as the landlord does not have to live in the house, it has the effect of increasing the number of cheonsei rentals in the short term. He also said, “There are measures such as increasing the (Jeonse) loan limit to ease the burden on tenants or giving ‘good lessors’ a property tax incentive.”
Minister Won emphasized, “The current lease law cannot be maintained even for the protection of tenants.”
Regarding the metropolitan express railway (GTX), he said, “The aim is to start construction of routes A, B, and C within the Yoon Seok-yeol administration, and routes D, E, and F aim to pass a preliminary feasibility study (eta) within the term of office.” Expanding the transportation network in the metropolitan area The aim is to improve the quality of people’s housing.
Correspondent Dongsoo Choi firefly@donga.com
