Desperate measuresSkyrocketing prices of jeonse — a unique way of renting a house in Korea with long-term deposits — are ringing alarms. Jeonse prices for apartments in Seoul have soared for 56 consecutive weeks. Even in suburban areas, apartments on jeonse contracts are difficult to find after landlords raised prices fast to prepare for tougher government regulations on jeonse prices. Ironically, the left-leaning Moon Jae-in administration’s effort to protect the well-being of tenants only ended up hurting people who don’t own their own home.
The government and ruling Democratic Party (DP) are even attempting to retroactively apply tougher regulations to existing lease contracts. However, excessive measures backfire. To brace for such retroactive actions, homeowners are refusing to extend their previous jeonse contracts with tenants even before three bills aimed at ensuring tenants’ rights are passed. Such homeowners will most likely raise rent prices in advance to make up for their expected losses from tougher government regulations on jeonse prices.
A DP lawmaker proposed that the government determine rent rates across the country. Rep. Yun Ho-jung, chairman of the legislation and judiciary committee, submitted a revision to a related law to allow mayors and governors to fix standard rents annually with some adjustments made according to a presidential decree. The market sees this as a totalitarian idea. How could a government determine standard rent charges in a capitalist system?
Regardless of ever-deepening concerns, the DP is trying to railroad revolutionary real estate bills — including the three bills on leases and rents — in an extraordinary session of the Assembly in July after turning a deaf ear to the criticism that tax and regulations alone cannot reduce soaring apartment prices. Real estate bills proposed by DP lawmakers include one that justifies criminal punishment of high-level officials with more than one home. Despite the apparent need to strengthen ethical standards for government officials, such an approach denies our Constitutional values, including private ownership.
Pressured by mounting public disgruntlement after a series of failed property policies, the government and DP are coming up with one ridiculous measure after another. If the government continues taking such steps, public trust will collapse. Desperate measures can never solve a problem.