Registered Private Rentals Can No Longer Circumvent Rent Caps with "Management or Option Fees"… MOLIT Announces Legislative Notice

Mandatory Disclosure of Fees and Calculation Methods in Lease Reports
Tenants Guaranteed the Right to Request Management Fee Audits
Metropolitan and Provincial Governments Granted Authority to Set Rent Increase Rates

Landlords registered as private rental business operators will no longer be able to circumvent rent regulations by raising management fees or option usage fees instead of monthly rent. On July 13, the Ministry of Land, Infrastructure and Transport announced that it will begin a legislative notice of partial amendments to the Enforcement Decree and Enforcement Rules of the Special Act on Private Rental Housing from July 14 until August 24.

This amendment targets the practice of increasing rents under the guise of so-called "option usage fees" for appliances, furniture, system air conditioners, and built-in closets. For private rental housing, rent increases are limited to within 5% of the previous contract. Some registered rental business operators have used management fees and option usage fees as a way to bypass this cap.

Government Sejong Complex, Sejong City. Photo by SeoYoon Choi

Going forward, when reporting a lease contract, rental business operators will be required to specify both the amount and the calculation method for management fees and usage fees. Previously, the reporting requirements were limited to the lease period, rent amount, the amount of purchase lease loans, and the status of quasi-housing tenants, making it difficult to track management fee collection. The standard lease contract form will also be revised. From the time the contract is signed, landlords must specify the management fees and usage fees that tenants will be responsible for, along with the calculation method, in the contract.

Tenant rights will also be strengthened. Tenants or tenant representative meetings will be able to request an audit of management fees and usage fees. Unless there is a justifiable reason, rental business operators cannot refuse such requests. Under current regulations, such requests are possible but not enforceable, so actual audits have rarely taken place.

The supervisory authority of metropolitan and provincial governments will be expanded. For registered rental complexes with 100 or more households, metropolitan and provincial governments will be able to set the rent increase rate through local ordinances. Currently, only cities, counties, and districts have this authority. In addition, metropolitan and provincial governments will be able to check whether lease deposit guarantee insurance has been obtained through the rental housing information system "RentHome."

The lease conditions reported by rental business operators will have to be announced not only through local government bulletins but also on websites. The scope of disclosure has been broadened so that tenants can more easily confirm the rent and management fee conditions before and after signing a contract.

The fines for minor violations such as simple omission of reports will be reduced. The first violation fine will be lowered from 5 million won to 3 million won, and the second violation from 7 million won to 5 million won. The fine for a third violation remains at 10 million won.

Han Seongsu, Director of Housing Welfare Policy at the Ministry of Land, Infrastructure and Transport, said, "With this amendment, we expect management fees and usage fees in private rental housing to become more transparent, and for tenant housing stability to be further strengthened."

The full text of the amendment can be found on the Ministry of Land, Infrastructure and Transport website under 'Policy Data - Legal Information - Legislative Notice/Administrative Notice.' Opinions can be submitted via mail or through the website.

This content was produced with the assistance of AI translation services.