Average monthly apartment rent in Seoul hit record 1.62 million won in July

Over 20,000 registered rental apartments set to exit mandatory lease period this year

Mayor calls for full review of owner-occupancy-focused real estate policy

Seoul Mayor Oh Se-hoon. [Seoul Metropolitan Government]
Seoul Mayor Oh Se-hoon. [Seoul Metropolitan Government]

Seoul Mayor Oh Se-hoon said Monday that a surge in jeonse and monthly rent prices is turning the entire city into a "residential hell," and called for drastic government action.

Writing on his SNS account Monday, Oh said the average monthly apartment rent in Seoul hit a record 1.62 million won ($1,200) in July, while jeonse prices have surged 9.95 percent and a shortage of jeonse listings persists. He added that he had heard the government was reviewing ways to reduce the comprehensive real estate tax burden on corporate rental operators, but called the move "too little, too late."

Oh said he had been calling since last year for eased loan regulations and an exemption from the comprehensive real estate tax for purchase-type rental operators, to allow them to supply sufficient jeonse and monthly-rent housing. "It is fortunate that the government is now at least reviewing what is an eminently practical proposal," he said.

He said the measures under consideration were still far from enough to resolve the current crisis, given the speed at which jeonse is disappearing and monthly rents are rising. "The government must swiftly produce drastic measures to revive the private rental market," he said.

Oh warned that branding registered rental operators as speculators and stripping their existing tax benefits might push some units into the sales market, but would also eliminate housing where tenants had been able to live long-term without fear of rent hikes or contract termination. "Ultimately, it is ordinary people who will bear the cost," he said.

He said more than 20,000 registered rental apartments in Seoul are set to reach the end of their mandatory lease periods this year, with around 30,000 more expected to expire by 2028. "I cannot shake the fear that the rental hell we are experiencing now may be only the beginning," he said.

Oh called on the government to conduct a full review of regulations he described as burning down the house to catch a flea, and to institutionalize private rental businesses as a pillar of stable rental housing supply. He also proposed establishing a legal definition for corporate private rental operators and clearly setting out their entitlements and obligations to foster a stable rental market.

Above all, Oh said, the fundamental solution to the current crisis was a full review of the real estate policy framework centered on owner-occupancy. "A binary approach that treats owner-occupancy as the only good cannot bring down home prices or revive the rental market," he said.


ikson@heraldcorp.com