Harmonization of Interests between Housing Lessor and Lessee in the Rental Market

Abstract

In South Korea, the domestic housing supply rate has already exceeded 100% since 2008, but the home ownership rate in 2021 still remains at 57.3%. In response to large-scale Chonse fraud, the government has come up with various solutions, but there is criticism that it is insufficient for a fundamental solution. This paper aims to derive a win-win plan between landlords and tenants in the rental market through legal and institutional improvement. First, it is necessary to partially restrict private landlords from freely choosing whether to register as rental businesses. Through this, it is possible to prevent a rental business operator who meets the requirements for rejection of the registration application under Article 7 (7) of the Special Act on Private Rental Housing from entering the rental market. In addition, the tenant's right to claim the return of the deposit can be substantially secured by requiring additional asset requirements for rental businesses of a certain size or larger. Although the lease system has positive factors such as a role as a residential stepping stone and a reduction in housing costs, it basically grants the right to freely dispose of a large amount during the lease period, while the legal protection for its return is insufficient. There have been various legal and institutional efforts to compensate for this, but tenants are still not sufficiently protected. The old customary Chonse was incorporated into Article 303 et seq.(Right to registered lease on a deposit basis) of the Korean Civil Code, but Chonsegwon is rarely used in practice. In terms of the protection of tenants, it is reasonable not to allow Chonse Lease. In reality, it is also possible to consider forcing the registration of leaseholds that are paid a certain amount or more of rental deposits. It is necessary to correct the practice that rental deposits are received much more than collateral purposes. Article 551 (1) of the German Civil Code restricts rental deposits not to exceed three times the rent for one month. It may also be considered to force leaseholds that are paid a certain amount or more of rental deposits to be registered.