Seoul to provide interest on loans to low-income households, when Jeonse renewal right expires in August

[자료=서울시]

Although the ‘Lease 2 Act’ came into force in August, with the price of jeonse expected to rise sharply ahead of the second year, the Seoul Metropolitan Government will start providing interest on jeonse loans for low-income households. In order to stabilize the cheonsei rental market, it was decided to provide information on the rental volume and to propose amendments to the law to revitalize the private rental market.

The Seoul Metropolitan Government announced on the 11th that it plans to promote the ‘Measures to stabilize the cheonsei rental market’ based on these contents.



First, loan interest will be provided temporarily to households facing a surge in jeonse prices due to the 2nd Lease Act, and financial support for newlyweds and young people, who were previously targeted for customized housing support, will be greatly strengthened.

From August, interest is provided to low-income households who have to sign a new jeonse contract as their right to request a contract renewal expires in August, with a maximum loan limit of KRW 300 million and a maximum of 3% per annum (at least 1% of the minimum interest rate paid by the person).



Temporary support for up to two years is provided for non-homeless tenants whose renewal contract expires between August 2022 and July 2023 by exercising the right to request contract renewal after the enforcement of the Lease 2 Act. We plan to support higher interest rates.



The city expects that the amount of contract renewal contract expiring by the end of this year will account for about 15% of the total jeonse transaction volume (an average of 4,730 cases per month).



From August, when tenants whose renewal contract expires, the city of Seoul will quickly negotiate with related organizations such as the central government, housing finance corporation, and banks so that practical support can be provided.



In addition, the number of households that provide interest support for newlyweds’ rental deposits will be increased by 30% (currently 8,000 households → 10,500 households), and the loan limit will also be increased from 200 million won to 300 million won. In particular, the plan is to actively suggest matching with the central government to the central government as there is a limit to the extension of the loan limit for the rental deposit, which has been frozen for the fourth year, only with the local budget alone.



Financial support for young people, whose housing cost is the biggest burden in their lives, will also be strengthened. The government is also pushing for proposals to increase the limit on the loan for the rental deposit from the current maximum of 70 million won to 150 million won in order to expand the scope of support for youth monthly rent and interest on the rental deposit and to reduce the monthly rent burden.



The city-level monthly rent given to young people below 150% of the median income will be supported by up to 30,000 this year. .



In addition, by using the actual rental contract expiration date, it provides ‘rental quantity forecast information’ to be released on a monthly basis, preventing damage or distortion of information due to arbitrarily predicted quantity information in real estate apps or cafes.



The rental volume forecast information (tentatively called ‘Jeonse All Informer’) is linked to the Seoul Housing Portal and posted monthly data. In order for citizens to use information more conveniently, they plan to continuously provide data through the app in agreement with the ‘real estate direct transaction platform’.



By disclosing the amount data segmented by region, area, and type, as well as the Jeonse rate by region by comparing the Jeonse declaration data and the actual transaction price, it is possible to understand even the risk of tin can jeonse.



In addition, through consultation with the government, it is planning to provide a text message service that informs households whose lease contract is about to expire when it is possible to request a renewal contract, what to pay attention to, and the duty to report when signing a lease.



It is also suggested to supplement the monthly rent report system to prevent expedient monthly rent transactions. Recently, as there have been cases in which additional management fees are requested in the name of house maintenance and repair, etc. by taking advantage of loopholes that are not included in the rental report item, we plan to propose to the government to include the management fee in the report item in the future.



In addition, to revitalize the rental market, it is proposed to revive registered private rentals and to amend the law to strengthen tax support for private rental companies.



The city plans to revive the short-term private rentals that were abolished after the July 10 Measures issued in July 2020 and expand the supply of rentals, which had plummeted. In addition, for privately registered rental business operators, it will be proposed to revise the Enforcement Decree of the Comprehensive Real Estate Tax Act to allow exclusion of the total real estate tax within the area subject to adjustment.



However, as ‘apartments’ among short-term private rentals may have a negative effect of stimulating speculative demand by degenerating into a tax-saving tool for multi-family dwellings, it is suggested that private rentals be activated only for low-rise houses, excluding apartments.



The city expects that the Jeonse market will continue to flow relatively stably in the second half of this year as the rate of increase in Jeonse prices has recently been flat and housing supply and demand will remain smooth until next year.



However, as tenants who have exercised their right to request a 2+2 year contract renewal since August 2020 are concerned that the previous increase in the previous year and the predicted increase in the second half of this year will become a reality, the Seoul Metropolitan Government has prepared a preemptive countermeasure. told

Kim Seong-bo, head of Seoul’s Housing Policy Office, said, “We will prepare a support procedure for tenants as soon as possible so that low-income households whose lease renewal contract expires in August do not experience difficulties because they cannot find a house right away due to a surge in jeonse prices, while spurring the overall stability of the cheonsei market. will,” he said.

reporter information

Shin Dong-geun

sdk6425@ajunews.com

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