"Why is the management fee so high?"... Tackling the 'blind billing' that hurts small business owners

[Financial News]
A bill has been submitted to the National Assembly to prevent landlords from charging excessive amounts under the guise of management fees to tenants. The bill mandates that landlords must disclose the details of management fees to tenants in writing.  Oh Se-hee, a member of the Democratic Party of Korea (Industry, Trade, and Resources Small and Medium Venture Business Committee, National Small Business Owners' Committee), announced on the 18th that he had proposed a bill to amend the 'Commercial Building Lease Protection Act' with these contents as the main point.
 The current law only regulates items such as rent and deposits, and does not have clear provisions on the calculation criteria or disclosure obligations of management fees. As a result, there have been ongoing criticisms that some landlords exploit the management fee items to circumvent rent increase restrictions or repeatedly charge excessive fees without standards.
 According to the '2023 Small Business Survey' by the Ministry of SMEs and Startups, 28.1% of small business owners cited 'excessive or unclear management fees' as the biggest burden factor besides rent.
 Data from the Korea Real Estate Board also confirmed that while statistics exist for management fees of large buildings, there is virtually no information for small or collective stores, placing them in a 'blind spot.'
 The issue was also raised during the national audit. In the 2022 national audit, cases were reported where management fees higher than monthly rent were charged, and 20% of lease complaints received by the Small Business Market Promotion Corporation support center were related to 'non-transparent or excessive management fees.' This is evidence that the legal gap is being exploited to use management fees as a 'means of unjustified rent increase' by landlords.
 The amendment proposed by Oh establishes 'Article 19-2', requiring that if a tenant agrees to pay management fees, the landlord must provide the details in writing, and specific matters such as the scope, method, and deadline of disclosure are to be determined by presidential decree.
 Oh emphasized, "The trick of increasing management fees is an unfair act that drives small business owners to the edge," adding, "Transparent disclosure of management fees is the minimum standard for a fair commercial lease contract." He continued, "If this bill passes, small business owners will be able to contract based on clear standards and information, reducing unnecessary conflicts and burdens," and "It is expected to contribute to establishing a fair lease market order."

junjun@fnnews.com Choi Yong-jun Reporter