Even Its Architect Can't Stomach Real Estate Policy Shambles

      October 29, 2020 13:06

      Finance Minister Hong Nam-ki, who was in danger of falling victim of his own real-estate policy blunders, will be able to sell one of two apartments he owns after all. Hong had to sell one to set an example after the government tried to tame real estate speculation and singled out multiple-home owners as the current greatest evil under the sun. Hong had already signed the contract to sell his home just south of Seoul, but the tenant living there decided not to move out, which an oven-fresh law allowed him to do. The law, devised by none other than Hong himself, gives tenants the right to extend their two-year lease by another two years unless the landlord moves in. That left Hong at risk of breaking his contract with the new buyer, but he managed to convince the tenant to take a hefty payoff and move out. Instead of coming up with a solution for the mess he created, he has jumped on the bandwagon of people paying off tenants to move out rather than abiding by the spirit of the law.

      Right now, many tenants who had originally agreed to move out after their two-year contracts expire are demanding compensation or they will not budge. And fair play to them. The law says they are protected, so why should they not take advantage of it? Real estate market insiders say compensatory payments range from W5 million to W10 million (US$1=W1,134). This is similar to the premiums that lessors of commercial rental space charge new tenants. Because policymakers made laws simply assuming that tenants are weak and property owners strong, contractual relationships between them have suddenly turned acrimonious.

      The rushed implementation of half-baked policies has created surreal conditions in the market that have never been witnessed before, leading to a severe shortage of homes available for lease or even monthly rent, causing lessees whose contracts are expiring to panic. But President Moon Jae-in on vowed in a speech at the National Assembly on Wednesday to "stabilize the real estate market without fail." How many times has he told the public that he would do something "without fail" and then promptly failed? The finance minister is being paid by the taxpayer to fix these problems, not to exacerbate them. But instead he pays his own tenant off. What did home owners do to deserve such exorbitant taxes and blackmail? They are paying for the government's policy mistakes.

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