GOVT TO SET LAWS OVER KOREA'S RENTAL SYSTEM

[Anchor Lead]

Apartment rental prices in the city of Seoul have recorded a spike for 54 consecutive weeks. The government and the ruling party have vowed to pass a new law aimed at curbing housing prices.

[Pkg]

​​An 84-square-meter apartment at this residential complex near Mapo Station in Seoul was leased for a 920 million won lump-sum deposit last week. It surged 100 million won in just one year.

[Soundbite] (REALTOR) : "Because of the shortage of apartments, landlords can raise rental prices as much as they want. Although some tenants do ask to lower the rent, there are also those who are willing to wait to rent an apartment for 920 million or 930 million won."

Although prices of apartments for sale have surged more than rental prices, the gap will likely narrow soon given the ongoing trend in the housing market. The primary factor is the shortage of available apartment units. Last month, the number of apartment lease and rental transactions fell to the lowest level on record. This stems from the growing demand for rental housing and a long waiting list of applicants for newly built apartments. Meanwhile, more and more landlords prefer monthly rents or half-lump-sum deposits to full lump-sum deposits because of low interest rates. The government and the ruling party have agreed to enact a new law on protecting tenants by banning landlords from raising apartment rents by more than 5 percent when renewing lease contracts and granting tenants the right to demand a contract extension. While some say the new measure could help stabilize the real-estate market in the long term, there are also concerns that landlords might raise apartment lease prices prior to its enactment.

[Soundbite] KIM SUNG-HWAN(CONSTRUCTION ECONOMY RESEARCH INSTITUTE OF KOREA) : "This could push landlords to raise the rent because they won't be able to do so in the next four or six years."

That's why authorities are considering applying the new regulations retrospectively. Constitutional violation and infringement of property rights remain as stumbling blocks. However, some say processing the matter quickly is needed to minimize undesired repercussions.