Contrary to the favorable comments of the ruling party that the leasing law is showing positive effects, side effects such as polarization in the jeonse market and the increase in rent for jeonse are intensifying after the system was implemented. Existing tenants can extend their contracts for two more years by using the right to apply for renewal of contracts and by using the cheonsei limit.
According to data submitted by Democrat Heo Young, a member of the Democratic Party of Korea on the 19th, the integrated monthly rent renewal rate for three weeks in December of last year recorded 73.3%. Compared to the average annual renewal rate (57.2%) from September 2019 to August 2020, it is 16.1 percentage points higher. Rep. Heo said, “The effect of the 3rd lease law is showing up.”
This is a one-sided analysis. The situation of existing tenants and new tenants differs by 180 degrees depending on whether or not they have the right to apply for contract renewal, which intensifies price polarization.
Even within one apartment, the difference in the total price varies widely. Songpa Helio City, Garak-dong, Songpa-gu, is the worst case of jeonse. At the beginning of last year, the amount of water was poured out at the occupancy, and the total price based on 84 square meters for exclusive use was formed between the high half of 500 million and the early 600 million, but at the beginning of this year, the 19th floor of the same equilibrium was traded at 1.24 billion won. Of the 9510 households, there were 472 items for sale (as of the 19th), but 818 cases were cut in half on July 31, last year, the date of the lease law enforcement. The situation is similar elsewhere. The 58.65m2 for’Gayang 6 Complex’ in Gayang-dong, Gangseo-gu, Seoul, was contracted for 231 million won on the 14th. It is more than 150 million won cheaper than the transaction price four days ago (400 million won). The 84㎡ exclusive for Banpozai, Banpo-dong, Seocho-gu, contracted for 1.8 billion won on the 13th and 1,275 million won on the 12th.
In particular, there is concern about a sharp decline in charter sales. According to Asil, the chartered volume in Seoul was 19345 as of the 19th of this month compared to 38,427 on July 31 of last year, which is half the level. Existing tenants are also highly concerned about housing insecurity after two years.
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