With the enactment of the cheonsei ban law, the cheonsei market for new apartments has disappeared. A view of a real estate agency in Seoul. / Photo = News 1
For apartments supplied in Seoul, where the tenant recruitment announcement is issued from the 19th, it is not possible to pay rent or rent at the time of moving in, and you have to live in. Violation of this will result in imprisonment for up to one year or a fine of up to 10 million won. There are exceptions, but in order to sell a house, it must be handed over to LH (Korea Land and Housing Corporation) as a sale price.
The government reinforced mandatory residence to prevent’lottery subscription’, but the jeon and monthly rents of new apartments disappeared from the market. This is why it is called the’Jeonseol Rent Prohibition Act’. Due to the burden of funds or personal reasons, you cannot enter the jeon or monthly rent and you must move in immediately. It means that when you move in, you should have a plan for funding up to the balance. The lottery subscriptions for dirt spoons became virtually impossible.
There is no opportunity anymore
Regions subject to this regulation are places where the upper limit system for pre-sale prices is enforced in the metropolitan area. The entire Seoul area is included, and in the metropolitan area, apartments supplied from public housing are included. After 2023, when the apartments supplied this year move in, the amount of jeon and monthly rent will disappear from new apartments. In Seoul, the’place of residence’ will virtually disappear. There is no chance for homeless people to live in new apartments.
According to the’Amendment to the Enforcement Decree of the Housing Act’ announced by the Ministry of Land, Infrastructure and Transport, the mandatory residence period is 2 to 5 years. In the case of public housing, a house with a pre-sale price of less than 80% of the nearby market price is obligatory for 5 years, and for a house with less than 80-100%, 3 years. Private residential land is 3 years for less than 80% and 2 years for less than 80-100% of the nearby market price.
The government’s regulatory will is strong. Failure to comply with the mandatory residency period will result in loss of fines and ownership. Violation of the period of duty of residence without reasonable cause will result in a sentence of up to one year in prison or a fine of up to 10 million won. The pre-sale apartment must also be sold to LH at the pre-sale price. If caught while illegally reselling the right to sell, the subscription qualification will be restricted for the next 10 years.
Illustration = Reporter Chu Deok-young [email protected]
△Residing abroad or living in another housing construction area for work, living, study, or treatment of diseases △Spouse’s residence due to marriage or divorce △A soldier who has received special housing and resides in another area upon appointment of personnel. And so on.
The’Jeon Rent Prohibition Act’, which is enforced this time, was announced by the government in May last year to reorganize the pre-sale market mainly for end users. The government predicted that the bill could block speculative demand and supply to end-users. However, the reaction in the market is different.
‘Cold Water’ in the Unstable Jeonse Market
Since the supply of rent to cheonsei, which was poured out at one time in the new apartment, was virtually stopped, it became difficult to expect a drop in jeonse prices and a stabilizing effect. Along with the second lease law, which took effect from last year, the cheonsei market is already on the rise. There is also a gap in the deposit between the party who requested the renewal of the contract and the contract that is entering the new contract. There are also cases where it is up to double.
According to the Ministry of Land, Infrastructure and Transport’s actual transaction price disclosure system, the exclusive area of 76 square meters of Eunma Apartment in Daechi-dong, Gangnam-gu, recorded a record high by signing a charter contract with a deposit of 1 billion won (2nd floor) on the 15th of last month. Compared to the contract signed for a deposit of 430,500,000 won (1st floor) on the 8th with the same area, it is about twice as different. 430,500,000 won is an increase of 5% (20,500,000 won) from 410 million won. In apartments in a large complex in downtown Seoul, the phenomenon of’double price’ of the charter price is not difficult.
The jeonse market is in turmoil. As the right to apply for renewal of contracts and new contracts are being made at the same time, the difference in the jeonse price is more than doubled. In the future, the rent for cheonsei in the new apartment is expected to disappear. / Source = Yonhap News
The problem is three years later. This is because most of the contracts are terminated after three years, even if the contract renewal is considered. In addition, the occupancy area, where the amount of rent for cheonsei is abundant, will disappear. In fact, in order to become a tenant of a new apartment within 10 years in Seoul, it is expected that only high-income homeless people and gold spoons will be unable to.
In addition, the so-called’method of purchasing with the jeonse rent’ was blocked when the apartment was sold and rented for jeon, but when there was more room for it. Only homeless people with money or funds will be able to subscribe. Considering the problems of children’s school or commuting to school, experts predict that subscriptions may be more concentrated with large-scale reconstruction with infrastructure.
The government said that it was to prevent lottery subscriptions, but there is a possibility that the intention of the revised bill may fade as the likelihood of higher apartment sales prices will increase. Even though the pre-sale price cap has already been applied, a case in which the pre-sale price rises due to an increase in the cost of housing land came from Raemian One Bailey, Seocho-dong. The Housing and Urban Guarantee Corporation (HUG) announced that it would raise the price of apartments to be sold by up to 90% of the surrounding market price.
This is the reason for the prediction that “only homeless gold spoons will be able to subscribe.” If the pre-sale price is more than 900 million won, intermediate payment loans are not allowed, and it is supplied only in general pre-sale without special supply. In the Gangnam area, including the reconstruction of’Dunchon Jugong’, which is being prepared for sale in Gangdong-gu, it is difficult to supply the pre-sale price of less than 900 million won except for the small size. If the’Monthly Rent Prohibition Act’ goes into effect, it will be impossible for a homeless person in Seoul to prepare a home through subscription.
Officials from the Korea Land and Housing Corporation (LH) are looking at public jeonse housing. / Photo = News 1
Meanwhile, the government’s countermeasure to cope with this market situation is the’Cheonse-type public rental housing’ introduced in November of last year. A total of 5,235 people submitted applications to 14,843 private rental housing units announced by LH in December last year, recording an average competition rate of 3.4:1. It is characterized by lowering the monthly rent burden by raising the proportion of deposits to 80% like jeonse. The rent is characterized by a low level of less than 70 to 80% of the market price.
It also plans to steadily supply public rental housing. According to the housing welfare roadmap, the company plans to secure 2.4 million long-term public rental housing units by 2025 and increase the inventory rate to 10%. According to the Ministry of Land, Infrastructure and Transport, 150,000 households were supplied as a result of the ‘2020 public rental housing supply performance’. This is 9000 households more than originally planned. By type, construction-type rental housing (72,000 households), purchase-type rental housing (28,000 households) and charter-type rental housing (50,000 households) are included. By region, 92,000 households, 61% of the total supply, were supplied to the metropolitan area.
Hankyung.com reporter Kim Hana [email protected]