S. Korea's finance chief lowers conversion rate for Jeonse-to-monthly rent from 4% to 2.5%
- 4 years ago
홍남기 "전월세 전환율 2.5%로 하향조정…9월 공공재개발 공모"
More government efforts are being unveiled to help tenants who are struggling to make ends meet.
South Korea's finance ministry on Wednesday revised yet another housing law...this time regarding the country's unique Jeonse system.
Kim Dami reports.
In a bid to lift the burden off tenants in South Korea, the nation's finance chief Hong Nam-ki has lowered the conversion rate for Jeonse-to-monthly rent...from the current four percent to two-point-five percent.
Under the old rules, a homeowner was required to receive four percent of a Jeonse contract as monthly rental fees if the owner wanted to switch the agreed Jeonse contract into a monthly rental or 'Wolsae' contract.
Hong's decision was reached Wednesday after the ministry's third housing market meeting.
"The current four percent conversion rate for Jeonse-to-monthly rent only expedites tenants converting to rent and increases the burden on tenants who don't own their own home."
Jeonse is a rental system unique to South Korea where the tenant gives the homeowner a lump sum of money, which is returned in full after the lease expires, usually after two years.
The lower conversion rate means lower rent for tenants.
For instance, a homeowner lowers the lump sum from 5-hundred thousand U.S. dollars to 3-hundred thousand dollars and takes the rest through monthly rent.
With the four percent conversion rate, the rent becomes around 660 dollars a month.
But with two-point-five percent rate, it's only 420 dollars.
Thus, the new measures are aimed at deterring homeowners switching from Jeonse to monthly rent.
Experts hope the revised rate will alleviate the Jeonse to rent converting trend, but they also express the need for stronger government controls and monitoring.
On top of that, the government will expand public access to moving-in notifications.
That's to prevent homeowners refusing to extend leases to rent their homes to others for a higher amount.
Hong also pledged to speed up a government plan to start building more housing units in the capital area as early as September.
Noting the latest measures are slowly cooling down South Korea's overheated housing market, the finance ministry vowed to closely monitor the market situation.
Kim Dami, Arirang News.
More government efforts are being unveiled to help tenants who are struggling to make ends meet.
South Korea's finance ministry on Wednesday revised yet another housing law...this time regarding the country's unique Jeonse system.
Kim Dami reports.
In a bid to lift the burden off tenants in South Korea, the nation's finance chief Hong Nam-ki has lowered the conversion rate for Jeonse-to-monthly rent...from the current four percent to two-point-five percent.
Under the old rules, a homeowner was required to receive four percent of a Jeonse contract as monthly rental fees if the owner wanted to switch the agreed Jeonse contract into a monthly rental or 'Wolsae' contract.
Hong's decision was reached Wednesday after the ministry's third housing market meeting.
"The current four percent conversion rate for Jeonse-to-monthly rent only expedites tenants converting to rent and increases the burden on tenants who don't own their own home."
Jeonse is a rental system unique to South Korea where the tenant gives the homeowner a lump sum of money, which is returned in full after the lease expires, usually after two years.
The lower conversion rate means lower rent for tenants.
For instance, a homeowner lowers the lump sum from 5-hundred thousand U.S. dollars to 3-hundred thousand dollars and takes the rest through monthly rent.
With the four percent conversion rate, the rent becomes around 660 dollars a month.
But with two-point-five percent rate, it's only 420 dollars.
Thus, the new measures are aimed at deterring homeowners switching from Jeonse to monthly rent.
Experts hope the revised rate will alleviate the Jeonse to rent converting trend, but they also express the need for stronger government controls and monitoring.
On top of that, the government will expand public access to moving-in notifications.
That's to prevent homeowners refusing to extend leases to rent their homes to others for a higher amount.
Hong also pledged to speed up a government plan to start building more housing units in the capital area as early as September.
Noting the latest measures are slowly cooling down South Korea's overheated housing market, the finance ministry vowed to closely monitor the market situation.
Kim Dami, Arirang News.