[이코노믹리뷰=우주성 기자] In the future, it will be impossible to rent a jeon or monthly rent for up to 5 years for apartments sold in the area of the limited sale price limit. Markets are expressing concerns that the’Monthly Rent Prohibition Act’ will aggravate the cheonsei crisis in major areas in the metropolitan area. The Ministry of Land, Infrastructure and Transport has issued refuted data based on the amount of jeonse, but these doubts are not easily resolved. It is analyzed that the subscription market will be more advantageous only to cash-rich people who can live after sales rather than general end users. Experts believe that the bill could be counterproductive for both cheonsei end users and subscription end users.
Jeonse market’sucking up and down’…this time ban on new construction
From the 19th, the government will implement the revised bill of enforcement ordinance of the housing law. Accordingly, in the case of a complex that receives an application for approval for recruitment of tenants in areas subject to the pre-sale price limit, a maximum period of 5 years is given. When selling a private residential house, it is mandatory to live for 3 years when the sale price is less than 80% of the nearby market price, and 2 years when the sale price is more than 80% to less than 100%.
For public housing, if the sale price is less than 80% of the nearby market price, 5 years, and if the price is more than 80% and less than 100%, an actual residence duty of 3 years is imposed. In fact, the amount of jeon and monthly rent for new apartments will be cut off. The Ministry of Land, Transport and Maritime Affairs explained that this is to provide housing to end users first.
Violation of the mandatory period also entails criminal and administrative measures. In case of violating the actual residence period, imprisonment for up to one year or a fine of up to 10 million won will be imposed. In exceptional cases, where it is difficult to live, the Korea Land and Housing Corporation (LH) can purchase it first.
Markets are concerned that the amendment to the housing law could further reduce the supply of jeonse, just as the second lease law (right to apply for contract renewal, limit on monthly rent) was implemented. This is because the share of jeonse supply through new apartments is not small in the total jeonse supply. In particular, in the long term, as the standby demand for jeonse is expected to increase due to the 3rd new city and 2.4 supply measures, voices are gradually increasing that the instability of the jeonse market may be prolonged.
In response to this criticism, the Ministry of Land, Infrastructure and Transport said in a refuted data on the 17th, “Considering the construction period, the actual occupancy period of these houses is expected from 2024 to 2025. From that point on, the government’s supply measures will be effective in earnest.” In addition, it is explained by the Ministry of Land, Infrastructure and Transport that there will be no change in the total amount of rental housing as the inventory of 2.4 million households for long-term public rental will be resupplied.
On the other hand, experts believe that it is difficult to supply sufficient rent to cheonsei by 2024 in the current supply plan.
Jeon-yu Kim, professor of urban and transportation engineering at Gyeonggi University, a charter market expert, said, “If a new housing site designated as a public housing district was developed through the Special Public Housing Act in the past, there was a high possibility that the amount of rental would be supplied as planned.” Urban development accounts for a significant portion of the city’s complex interests and procedures. It is a plan that takes more than 10 years even for the private sector. “It is an ideal idea to see that the jeonse market will be supplied with a significant quantity in five years simply by simplifying the procedure.”
Prof. Kim continued, “As compared to the private sector, projects involving the public have more detailed regulations and are more complex, so they tend to avoid them. For example, in many cases, the youth housing business in the station area also only achieved 10% of the existing planned volume.”
In the end, Professor Kim warns that there is a high probability that this housing law enforcement decree could adversely affect the jeonse market. He said, “In addition to the introduction of the second lease law last year, there is an increasing number of cases where the owners live, donate, or sell existing jeonse houses due to strengthening requirements for real residence and heavy duty on ownership and capital gains tax. In this complex situation, if the supply of new apartment rentals is blocked, it can sufficiently stimulate the jeonse market in the future.”
‘Firework’ for subscribers with low funding power… “Newlyweds need supplementary measures for the first time in their lives”
This measure is not good news not only for jeonse refugees but also for end users. This is because it has become more difficult for those who purchase new apartments to pay for the sale. In the past, if the balance was insufficient, it was possible to set up a charter and cover the pre-sale price and move in directly after several years.
However, from the 19th, this kind of fundraising is effectively banned. Therefore, if a new apartment in Seoul with a pre-sale price of KRW 1 billion is sold in the future, the remaining KRW 800 million must be paid by the contract term, excluding KRW 200 million that can be loaned at a mortgage loan ratio (LTV).
Following the regulation of loans, real estate occupancy through jeonse was blocked, and some real estate communities have posted a series of articles pointing out these shortcomings. In one community, the criticism that it was for end users and that only people with a lot of cash could move into the new building received considerable support.
Professor Kim is also evaluating that the threshold for subscription entry by subscribers with weak funding power is much higher. He said, “Especially for end users such as newlyweds, there are not many assets. It is even more difficult for these people to buy a home after waiting for them to form an asset. This is because the rate of increase in housing prices is much faster than income.”
Prof. Kim continued, “If a plan to live up to five years collectively from the time of move-in is forced, there will be no last means to raise the balance, making it more difficult to enter the housing market in the end.”
Therefore, Professor Kim argues that exceptions for end users such as newcomers or newlyweds should be added as clues. He said, “In reality, it is often difficult to meet the timing of moving in immediately after construction. It is common in cases where the process of securing an existing jeonse deposit, moving in or planning a loan, etc. takes 6 months to 1 year or longer.” He said, “A real residence requirement, such as 5 years, is given, “It is necessary to flexibly adjust the actual occupancy period, not by moving in, but by deferring the actual occupancy until two years after the store.”