A homeowner identified as A, who is renting out an apartment in Seoul's Mapo district, extended a lease with his tenant last month, more than three months before the jeonse (a Korean lease system requiring a large lump-sum deposit instead of monthly rent) contract was set to expire. A, who had moved to a job in Pangyo, rented out his Mapo home and was living in a jeonse rental in Bundang.
"I agreed with the tenant on the use of the contract renewal right," A said on the 20th. "Had I known the government would announce in early May an exemption from the actual residence requirement for non-resident single-home owners selling tenant-occupied properties, I would have found another way."
The reason cases like A's have emerged, despite the government opening an exit for non-resident single-home owners to sell their tenant-occupied homes, lies in the conditions for triggering the contract renewal right. Under the current Housing Lease Protection Act, if a landlord wishes to terminate a contract on grounds of actual residence, he must notify the tenant between six months and two months before the contract expires. If the landlord misses this window, he cannot refuse the tenant's request for contract renewal.
For homes with contracts expiring before July 11, the renewal under the renewal right had already been finalized by May 12, when the government expanded the actual residence exemption. This means the jeonse contract expiration has been pushed back to after May 11, 2028. The problem is that when the government announced the expansion of the actual residence exemption to non-resident single-home owners this time, it attached a clause requiring move-in for actual residence by no later than May 11, 2028. A's apartment, with the contract expiration pushed to early July 2028, does not qualify for the actual residence exemption.
From A's perspective, although he had intended to sell, the slight mistiming has made it difficult to sell the home. "I won't be able to consider selling until 2028," he said. "Instead of fixing the move-in deadline at May 11, 2028, I wish they would extend it to around the contract expiration date."
The government also recognizes the issue. "The criticism that the timing is misaligned with respect to the jeonse contract renewal right has been a controversial issue since the actual residence exemption was applied to multi-home owners in February," an official at the Ministry of Land, Infrastructure and Transport said. "We decided to apply the same standard as in February this time as well."
Suh Jin-hyung, a professor of real estate law at Kwangwoon University, said, "Regulatory policies inevitably create well-intentioned victims who fall on the borderline." He added, "It is the government's role to prepare supplementary measures to minimize such victims."
