Democratic Party Calls for "Extension of Owner-Occupancy Deferment Under Land Transaction Permit System Through Next Year"; Lease Renewals to Be Allowed

[Financial News] The Democratic Party has proposed that the government extend through next year the deferment of the owner-occupancy requirement for homes currently leased to tenants in land transaction permit zones. The proposal is intended to stabilize the jeonse and monthly-rent housing market and ease tenants’ housing insecurity by allowing renewals of existing lease contracts.
At a floor leadership meeting held at the National Assembly on the 15th, Kwon Chil-seung, chair of the Democratic Party’s policy committee, said, "To ease tenants’ housing insecurity and stabilize the jeonse and monthly-rent housing market, we need to consider extending the current owner-occupancy deferment through next year and allowing lease renewals as well." He added, "We will work closely with the government to ensure that the public faces no inconvenience." Measures to stabilize the jeonse and monthly-rent market were also discussed at a high-level meeting between the ruling party and the government on the 13th, suggesting that specific institutional improvements will be discussed through further consultations.
The government previously designated all of Seoul and parts of Gyeonggi Province as land transaction permit zones under its October 15 real estate measures last year. However, concerns were raised that transactions involving homes occupied by tenants could effectively be blocked. Under the current system, anyone who purchases a home in a land transaction permit zone must move in within four months of receiving approval and live there for two years. In response, the government introduced a supplementary measure in May allowing non-homeowners who purchase leased homes to defer their owner-occupancy requirement until the existing lease contract expires.
The problem is that applications for this special measure are available only through the end of this year. In addition, the current measure defers owner-occupancy only for the remaining term of the existing lease and does not recognize a lease extension resulting from the exercise of the right to request a lease renewal. In other words, the Democratic Party believes that landlords seeking to sell their homes next year cannot use the special measure, while tenants may also face restrictions on renewing their leases.
Kwon, the policy committee chair, pointed out, "The expanded deferment of the owner-occupancy requirement can be applied for only through the end of this year, meaning that applications will be impossible for those who want to sell their homes next year under the tax reform plan." He added, "Because only the remaining lease period is recognized and renewed lease contracts are not, the measure could affect tenants’ housing stability."
If the government accepts the Democratic Party’s proposal, non-homeowners who purchase homes with tenants in land transaction permit zones may be able to postpone their owner-occupancy start date further than under the current rules. If applications for the owner-occupancy deferment are allowed through next year and tenants are also permitted to exercise their right to request a lease renewal, some homes could have their owner-occupancy requirement deferred until as late as 2031, according to forecasts.

[email protected] Song Ji-won Reporter