Policy to revitalize ‘registered rental’, which is a degenerative means of speculation by multi-residents
‘New Stay’, as an example, is controversial over the acquisition of extortionate profits from a private construction company
Apartments are densely built in Seongdong-gu, Seoul. Reporter Han Soo-bin
The Presidential Takeover Committee, which announced a policy to reduce or abolish the Lease Protection Act, suggested revitalizing the private rental market as a measure for tenants. This is the opposite of the current government, which has been emphasizing the role of the public in the rental market, such as expanding public rentals and introducing the right to apply for contract renewal. However, there are voices of concern over the re-introduction of the policy that has already exposed many problems in the rental market in the case of the expansion of ‘private registered rental’ or the introduction of corporate-type private rentals such as ‘New Stay’, which the transition committee came up with as a way to revitalize the private rental market. is growing
On the 30th, the Real Estate TF of the Acquisition Committee held its first meeting after its inception and began to prepare the next government’s real estate task. The TF was led by Gyo-eon Shim, a professor of real estate at Konkuk University, and the finance and tax divisions and supply and housing welfare divisions were placed under them. In each subcommittee, expert working-level members from the Economics Division 1 and 2 of the Transition Committee were assigned. The TF said, “We plan to appoint nine real estate market experts as advisors to make the discussion of the real estate TF more market-friendly and realistic.” I will,” he said.
As much as it emphasized market friendliness, the tenant measures of the transition committee were thoroughly centered on the private sector. If you look at the lease-related measures that the TF revealed the day before, there are two main points: ‘activation of private rental registration’ and ‘activation of private rental housing’. They sound similar, but there is a difference. ‘Activation of private rental registration’ means expanding the existing ‘private registered rental’ system, and ‘revitalization of private rental housing’ means that the private sector will build and supply new rental housing.
President-elect Yoon Seok-yeol leaves the Presidential Takeover Committee in Tongui-dong, Jongno-gu, Seoul on the afternoon of the 29th.
Civic groups and the real estate industry are raising concerns about the fact that both measures were introduced in the past, but were reduced or abandoned due to side effects. In the case of privately registered rental, if a multi-residential owner registers a house other than his/her own residence as a rental house with the government, he/she will receive various tax benefits, such as exclusion of comprehensive real estate tax, but increase the rent only within the limits set by the law (within 5% of the existing rent for two years) system that can be done. It was activated in earnest during the Park Geun-hye administration, and the current government implemented a policy to encourage the expansion of registered rentals until real estate prices soared.
However, contrary to the purpose of the registered lease, side effects were revealed as multi-homeowners turned into a ‘speculative means’ that allows them to hold real estate for a long time without paying tax. A real estate agent in Jamsil, Seoul, said, “Everyone who knows that if you buy an apartment and bundle it with registered rental, you can pay tax and hold and invest for a long time. one,” he said. As it was found that the ‘restriction on rent increase’, a condition of tax benefits, was not properly observed, the government set up a report center dedicated to illegal activities to investigate.
As the side effects of registered rentals grew, the government is pushing to reduce or abolish the system in stages, such as significantly reducing tax benefits for registered rentals since last year. The plan of the transition committee is to reverse this and increase tax benefits for registered rentals to revitalize the system.
‘New Stay’, which the transition committee cited as an example of the supply of new rental housing led by the private sector, was also introduced in January 2015 as a measure against middle-class tenants by the Park Geun-hye administration at the time, but it was practically abandoned as the high rent problem and suspicions of extortion by the participating private construction companies surfaced. It is a policy that has been New Stay is designed in such a way that a private construction company receives a cheap supply of public housing land from the Korea Land and Housing Corporation (LH), builds a rental house, leases it for 7-8 years, and then sells it. As real estate prices soared, construction companies participating in the project are expected to earn huge sales revenue. In a parliamentary audit by the Ministry of Strategy and Finance last year, lawmaker Jeong Il-young of the Democratic Party of Korea pointed out that “even as of 2016, construction companies participating in New Stay’s rental apartment sales amounted to 1.4 trillion won.”
Kim Seong-dal, director of the Real Estate Construction Reform Headquarters at Citizens’ Coalition for Economic Justice (Gyeongsilyeon), said, “Registered lease only has resulted in encouraging speculation by multi-homeowners, but it is a policy that has already failed as a market stabilization or tenant countermeasure. It was obvious that only the power would be a good thing, but I can’t understand why they are pushing it again.” An official from the real estate industry said, “In the past, New Stays in Wirye and Dongtan were mostly homeowners with expensive reconstructed apartments rather than tenants due to high rents. said.
