A new epicenter of social conflict
The author is the deputy national news editor of the JoongAng Ilbo.
Politics and religion are often taboo topics in close company as they can lead to a brawl and ill feelings. One more topic is added to the list — housing, or specifically real estate policy under the Moon Jae-in government. Our family gathering for Chuseok holiday turned into a fiery argument. Everyone had different opinions and good reasons.
The most heated wrangling was over whether a single homeowner also should be subject to an excessive tax. Those who lived in less expensive neighborhoods argued it was a price to pay for enjoying good infrastructure and advised to move out if one cannot afford the tax. The other party retorted it was unfair to levy a high tax because home prices went up irrespective of the owner’s intention — and while their income remains stagnant. The more they argued, the more heated the conversation became. I excused myself to avoid more uncomfortable scenes.
A home is not just a space of living, but is also for dreaming. Most people dream about having a decent home to live in with their family. TV programs searching for homes to meet the needs of the seekers on their behalf are popular these days because everyone has desires for better homes.
But it has become a luxury to regard homes as a space to breed dreams. Housing no longer offers stable security, but has turned into the source of resentment and row. Apartment seekers form a long queue for a chance to have a peek at any new rental that comes by. Rentals are devastatingly scarce. Even those lucky enough to find a home cannot set the moving date because existing tenants refuse to move out claiming their tenant rights under the new law.
Even Deputy Prime Minister for Economic Affairs Hong Nam-ki, who also serves as finance minister, has joined the rent conundrum. As he could not sell his extra home since he could not kick out his tenant due to his rights under the new law guaranteeing two extra years beyond the original two-year contract term, the finance minister faced punitive levies for owning two homes.
Now tenants demand “compensation” money in return for terminating the lease. The check for some goes up to millions of won. Those in desperate need to find a home sometimes offer extra fees to realtors to come to them first with new openings. Homeowners also demand fees to show off their apartments for rent, while tenants trade their rights in premium.
The three rent laws have rocked the housing market. Authorities are confounded by various side effects. Land Minister Kim Hyun-mee speaks of misapplication of the policy. Hong sounds more defeated, saying the government has studied all rent measures taken over the last 10 years and nothing seems feasible at this stage. President Moon Jae-in remains confident, vowing to stabilize the rent market no matter what. That would mean more measures, but the market is uninterested. People have lost track of how many and what measures had come out as none had worked out.
Homeowners have more to worry about. The government and ruling party are planning to raise the valuation of apartments and land — which are the basis for taxation — up to 90 percent of the market prices by 2030. Homes — whether they are expensive or not — would be slapped with fatter tax bill. If one cannot afford the tax, the only choice is to sell it and move to a cheaper neighborhood or area. To an anonymous writer on the Blue House online petition page, the Blue House explained that its goal is only to root out real estate speculation and protect the genuine home seekers, not to raise taxes. But many people complain that the government is trying to seize 10 million won ($8.836) from a family after feigning generosity by handing our Covid-19 relief money amounting to 1 million won per family.
The ruling party is floating the idea of cutting income tax, but most see it as a design to woo voters in next year’s by-elections for major gubernatorial posts, including the mayors of the two largest cities, Seoul and Busan.
To fix the flaws in the three rent-related laws, the fundamental direction must be changed. Otherwise, the makeshift measures will help little.
Authorities claim the confusion is inevitable in a transitional period. But people are pained by the dried up long-term lease market and the costly monthly rent burden. People with homes also cannot sleep well worrying about the tax bill. The conflict between tenants and landlords across generations is deepening. The government’s real estate policy has become a new epicenter of social conflict.