[EDITORIALS]Market might hold answerThe government announced that more public input will be sought on a new law on commercial property protection, as the debate on how to regulate commercial property leases continues. The law is to be introduced in November.
The government's proposal differentiates by region the range of properties that would be covered. Seoul, for example, would get the highest cutoff, with full protection on lump-sum lease deposits not exceeding 160 million won ($133,000). Properties outside the capital region that are leased for 90 million won or less would be covered.
The scope of protection is already being debated, with commercial tenants and civic groups questioning the validity of the study that formed the basis for the cutoffs. Merchants in central Seoul, where the rent is bound to be higher, are demanding an increase in the cutoff, saying that protecting only the lower 80 percent of tenants would exclude most of them from coverage.
The regulation sets the rate at which lump-sum deposits can be converted to monthly rents at 12 percent, but this is questioned because actual rates are often as high as 24 percent.
Much of the law on commercial rental protection has been questioned from the very beginning, in large part due to the sloppy way it has been put together. A rumor in the spring, which went unchecked, falsely claimed that under the new law rent on commercial property cannot be raised for five years, resulting in a surge in rents to preempt the law. When the cutoff for protection was revealed recently, some property owners tried to raise the rent above the cutoff. All this shows how far-reaching the effect of an ill-prepared policy can be.
But now that the law is about to go into effect, the government must find reasonable adjustments to the proposal through public input. And a plan must also be formulated to prepare for more problems, which are sure to result.
Commercial property leases may be an area that is best left to the market, with minimum government intervention. Depending on the degree of the problems, both actual and potential, we must not rule out scrapping or revising the law altogether.