Improving the rental market
Rental businesses will now be able to take advantage of the government’s eased regulations to help spur the chronic shortage in rental housing for the middle and working class. The administration will also boost deregulations of land development and offer financial help to people who run a business in a rented space.
To achieve the goal, it seeks to bring corporate capital into the rent market by giving the go-ahead to rental businesses.
We welcome the government’s direction because rentals are in line with the changing paradigm of the housing market, where tenants prefer monthly payments to lump-sum, long-term contracts or home ownership.
However, for business rentals to take root in our housing marking, there are many hurdles to overcome and areas that need to be fixed. To make the measures work, related bills must be passed and land should be made available by the government. It would take some time and will not immediately ease the current shortage of rental units.
Rental units supplied by private companies also may not be in the most desirable neighborhoods. That’s because the plan has been initiated by the government, not the market, which supplies houses according to demand. The government must find ways to fix the discrepancies in supply and demand before it leads to failure.
There should be a variety of choices in the rental market in order for it to become normalized. In other words, the supply of rent from companies and individuals on a monthly and long-term basis should be offered to even out the market. At the same time, equal focus and incentives should be given to individual homeowners to induce them to offer their homes up for rent.
In addition, businesses providing maintenance and management services for individual renters also need to be activated. Now that the government has shifted its housing policy to keep abreast of the times, it should be more aggressive in building the rental market. When home rental businesses compete in various forms, rent prices will naturally come down in order to meet the demand and customers’ needs. JoongAng Ilbo, Jan. 15, Page 30