On the 20th, the ruling and opposition parties reached an agreement at the National Assembly Land, Infrastructure and Transport Committee’s Land, Infrastructure and Transport Bill Review Subcommittee to pass a revision to the Special Act on Support for Victims of Lease Fraud and Housing Stability (Lease Fraud Special Act), which stipulates that the Korea Land and Housing Corporation (LH) will bid on houses that were victimized by lease fraud and provide them to victims as public rental housing for up to 20 years. This has been three months since the Democratic Party of Korea single-handedly passed the Lease Fraud Special Act in the 21st National Assembly in May of this year using the “compensation first, recovery later” method, and President Yoon Seok-yeol exercised his right to demand reconsideration (veto) and the bill was scrapped. This is the first livelihood bill that the ruling and opposition parties agreed to pass among the bills that President Yoon vetoed.
The bill that passed the subcommittee that day is expected to pass the National Assembly plenary session on the 28th after going through the Land, Infrastructure and Transport Committee plenary session and the Legislation and Judiciary Committee. It appears that a bill to support victims will be prepared three years after the “three mothers’ jeonse fraud” case, in which around 500 villas in Gangseo-gu and Gwanak-gu, Seoul were purchased through “no-capital gap investment” and then the deposits were embezzled, was discovered by the police in May 2021.
● Providing housing for up to 20 years to victims of rental fraud
The special law on jeonse fraud, which the ruling and opposition parties agreed on in the Land, Infrastructure and Transport Committee subcommittee that day, includes measures to reduce victims’ housing burdens or support a portion of their jeonse deposits. The Land, Infrastructure and Transport Committee revised the bill, reflecting the opposition party’s “cash support” plan, centered around the government and ruling party’s plan.
The bill includes a provision that LH will receive the preemptive right from the victim, participate in the auction, and then provide the victim with the house that was won as a public rental for up to 10 years. At this time, LH will support the auction profit (the amount obtained by subtracting the winning bid from the appraisal price) that occurs after participating in the auction as rent. For example, if LH wins the bid for a house that was a victim of a jeonse fraud with an appraisal price of 100 million won for 70 million won, the difference of 30 million won will be used as a rental support fund.
Victims who do not wish to live in the damaged housing can choose to rent other public rental housing or private housing through LH, called ‘Jeonse Lease’. Even after 10 years and the end of rental support, victims can live there for an additional 10 years by paying public rental-level rent if they wish.
It also includes measures to support tenants of multi-family homes and illegal structures who were left out of victim support. The deposit limit for victim recognition has also been raised from 300 million won to 500 million won. In addition, the Victim Support Committee can independently recognize an additional 200 million won, so tenants with rents between 500 million won and 700 million won can also be recognized as victims of government-supported jeonse fraud. Kwon Young-jin, a member of the People Power Party and floor leader of the Land, Infrastructure and Transport Committee, said, “This bill cannot be perfect. It has been made so that the government can conduct a survey on jeonse fraud every six months, report it to the National Assembly, and improve the system if it is insufficient.”
● Ruling and opposition parties: “If discussions drag on any longer, damage relief will be delayed”
The bill passed that day differs from the ‘compensation first, recovery later’ bill passed by the Democratic Party in the 21st National Assembly in the payment method and budget utilization. The opposition party proposed a direct cash payment method in which the Housing and Urban Guarantee Corporation (HUG) would use the Housing and Urban Fund to return a portion of the victims’ jeonse deposit. The opposition party accepted the government and ruling party’s plan because it considered that rental housing rental support is effectively the same as cash support and that if the discussion drags on any longer, relief for the victims could be delayed. Moon Jin-seok, floor leader of the Democratic Party, said, “The Democratic Party’s original principle of relief for victims without blind spots has also been accepted.”
The Democratic Party reintroduced the bill in June, the first month of the 22nd National Assembly, after the Special Act on Lease Fraud was scrapped without a re-vote after exercising its veto in the 21st National Assembly. The People Power Party proposed a bill containing support for public rental housing as a party platform last month. The opposition party initially expressed concern that “there could be blind spots if the auction profit is small or the victim does not want to live in the victimized housing.” In response, the government presented the private housing lease as an additional option, and reached a compromise. An official from the Ministry of Land, Infrastructure and Transport explained, “We have partially accepted the opposition party’s demand for cash support and have come up with an alternative to support the victims’ housing costs with the auction profit.”
Song In-ho, director of the Economic Information Center at the Korea Development Institute (KDI), said, “When LH participates in an auction, the key is to calculate an appropriate winning bid price so that it can generate an auction profit.”
Reporter Cho Kwon-hyung [email protected]
Reporter Dong-soo Choi [email protected]
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2024-08-21 02:00:58