SEOUL (SOUTH KOREA) – South Korea’s finance minister Hong Nam-ki, who is credited with bringing in rules protecting tenants and slowing deposit increases, has been forced to hunt for a new home. This comes amid landlords reacting to the new rules by evicting tenants so that they can bump up deposits.
Ever since his housing rule came into effect in July, the deposit of the house where he lives 20 minutes from parliament has gone up by a third.
“Worse comes to worst, he can camp by the Presidential Blue House, right?” asked a netizen on a real estate forum.
Ever since left-leaning President Moon Jae-in inherited loosened mortgage rules from the previous government three years ago, apartment prices in the capital have soared by more than 50%.
To slow the pace of the buy-to-rent demand, the Housing Lease Protection Act introduced by Hong capped the hike of “jeonse” deposits at 5% thereby allowing tenants to extend standard two-year contracts for another couple of years unless the landlord moves into the property.
Jeonse is a lump-sum returnable amount paid to the landlord instead of the monthly rent. Landlords invest the deposit and enjoy its returns.
With the introduction of the act, there was a shortage of jeonse housing as many landlords sought to evict tenants so that they could enhance deposits for new tenants.
The minister’s lease period ends in January at which time his landlord will move into the property, said local media reports.
“My fellow landlords, let’s not rent out to Hong, let him suffer!” wrote another netizen on the popular real estate forum. “Let’s make him feel what the government has done!”