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Since the Housing Lease Protection Law, as the right to request the renewal of the contract, came into force at the end of July, there are cases in which the mediation was conducted through the Housing Lease Dispute Mediation Committee (Correction Committee). It was primarily a dispute over the term of the lease.
◇ 1.2 billion private houses … Judgment in favor of tenants
The first case came from ‘Macro River Park’, a very high priced apartment in the Gangnam area of Seoul. This apartment is one of the most expensive in Seoul last year when the price for 3.3m2 (pyeong) exceeded 100 million won.
According to Korea Legal Aid Corporation and others, in December 2018, Tenant A signed a 19-month lease with a deposit of 1.28 billion won. As it was, world medicine should have expired on July 20 this year, but since the owner changed in half, the contract with the new owner, B, was extended until August 31 this year. In parallel, as of September the deposit was 100 million won and the monthly rent was 4 million won, so it became half a jeonse. As of November it was agreed to increase the monthly rent to 5 million won.
However, on July 31 the amendment to the leasing law went into effect and the situation changed. On the first day of law enforcement, Tenant A insisted, “I will exercise the right to request renewal of the lease and will live 2 more years under the same conditions as the current one (1.28 billion won).” As jeonse’s contract was extended until August 31, it is believed that the expiration is still 1 month and the right to request the contract renewal can be used.
On the other hand, landlord B argued that jeonse’s original period ended on July 20, so he could not use the right to request the contract renewal. Therefore, the tenant had to pay 4 million won per month as promised in October, and then asked to pay 5 million won or leave the house.
How did the mediation committee judge this case? Although it did not unilaterally listen to landlord and tenant complaints, the decision was made to be more favorable to the tenant based solely on the results.
The mediation committee said that the current lease was extended until the end of August and that tenants could live until the end of August 2022 using the right to request contract renewal. However, according to an agreement between the tenant and the landlord, the jeonse would be converted into a reverse tax (monthly rent with guarantee). It is a condition to pay 1.8 million won per month for a deposit of 750 million won as of August.
Compared to the original monthly rent of 4 million won (5 million won as of November), a monthly rent of 2 to 3 million won can be saved. As this is a contract that has been extended by exercising the right to request the renewal of the contract, it is not necessary that you complete the two-year lease term if you wish.
◇ The number of inquiries about rental leases has almost doubled
The Korea Legal Aid Agency Housing Lease Dispute Mediation Committee submitted a total of 229 dispute settlements since July 31, when the new lease law came into effect on the 18th. Compared to the same last year’s period (271 cases), there was a slight decrease, but the number of adjustments related to the contract renewal increased significantly from 4 cases to 21 cases. The number of requests related to the rental period also increased from 0 to 4 last year.
The number of consultations was 14,830, almost double compared to the same period last year (8,614). The number of inquiries related to the ‘lease period’, which is deeply related to the right to request the renewal of the contract, has increased significantly from 473 to 2354 cases, and the item ‘increase of the lease deposit’ ‘related to the maximum rent limit of cheonsei increased from 71 to 512 cases.
Although the government has published a ‘Commentary on the Leasing Law’, the number of dispute settlements is expected to increase significantly in the future as there are many different cases for each rental agreement. Experts predict that the chaos in the rental market will continue until the arbitration committee or the courts have accumulated some interpretations related to the leases.
