Real estate agents are ‘incensed’ by the mandatory verification of landlord tax arrears… “Good intention, but not easy”[황재성의 황금알]

by times news cr

2024-07-14 13:35:54

1: Mandatory verification of landlord tax arrears from the 10th
2: To prevent fraud… it must be stated in the contract
3: Expanding practical training to 64 hours starting next year
4: Incorporation Activation vs. Personnel Limits and Deregulation

< 황금알: 황재성 기자가 선정한 금주에 알아두면 좋을 부동산정보 >

We live in an era where dozens of pieces of real estate-related information are pouring in every week. It is not easy to find the information that will make money. Dong-A Ilbo will help our readers by finding valuable real estate information every week and summarizing its meaning.

“The intention is good, but…”
Starting from the 10th of this month, the information that real estate agents must inform tenants of when signing a lease has increased. The landlord’s overdue taxes and the deposit of the first-priority tenant have been added. In addition, this information will be added to the ‘Confirmation and Description of Brokerage Property’ attached to the contract, and the signatures of the landlord and tenant as well as the person themselves must be obtained. Failure to comply with this will result in penalties such as suspension of qualification or imposition of a late fee.

These are measures taken in accordance with the enforcement ordinance and enforcement regulations of the revised Real Estate Brokerage Act, aimed at preventing rental fraud that has become a social problem since the end of 2022. The revision of the law was made on April 9 of this year, and after a three-month grace period, it will be implemented from the 10th of this month.

The real estate agents’ response to this is fierce. Above all, many of them say, “If the landlord does not come forward because the landlord is not obligated to provide information on tax arrears, there is nothing we (real estate agents) can do.” In short, “The intention is good, but it is not easy to follow in reality.”

This reaction is also related to the market situation of the real estate brokerage industry, where the number of real estate brokerage offices closing down due to the housing market slump is increasing significantly. According to the Korea Real Estate Brokerage Association, the number of real estate brokerage offices closing down last year was 14,379, the highest number since 2019. The monthly average is 1,198. The situation is not good this year either. As of May, 4,859 offices have closed. The monthly average is 972.

The government is aware of this situation, but is unable to mandate landlords to provide information due to concerns that it could undermine the constitutional value of privacy. However, it is adding various measures to supplement this.

First, the ‘Certified Real Estate Agent Training System Improvement Plan’ announced by the Ministry of Land, Infrastructure and Transport on the 10th. It is scheduled to be implemented starting next year, and the key point is that the number of hours of practical training that certified real estate agents must receive before opening a business will be doubled (64 hours) from the current level (28-32 hours).

The Ministry of Land, Infrastructure and Transport also plans to actively encourage the enlargement and incorporation of real estate brokerage firms in order to advance the real estate brokerage industry. To this end, it has decided to pursue a plan to expand the types of work that can be done concurrently.

Real estate agents are also raising their voices for change. As the damage from jeonse fraud has become a social concern, consumer distrust of real estate agents has reached an all-time high, and change is inevitable in order to overcome this situation. However, the solution has a different perspective from the government.

It is expected that these movements by the government and the real estate brokerage industry will have considerable effects on the real estate market and consumers. This is because real estate brokers are important stakeholders who move the real estate market. Let’s take a close look at the revised Real Estate Brokerage Act enforcement ordinance and enforcement regulations, related government plans, and the movements of the real estate brokerage industry.

Eliminate blind spots in rental contracts

According to the revised Enforcement Decree and Enforcement Rules of the Real Estate Brokerage Act, a real estate agent must separately introduce matters related to the lease agreement and the real estate agent's confirmation explanation in the real estate confirmation manual and obtain the signatures of the real estate agent's landlord and tenant. A notice about real estate for quick sale is posted at a real estate agent's office in an apartment complex in Songpa-gu, Seoul. Dong-A Ilbo DB

According to the revised Enforcement Decree and Enforcement Rules of the Real Estate Brokerage Act, a real estate agent must separately introduce matters related to the lease agreement and the real estate agent’s confirmation explanation in the real estate confirmation manual and obtain the signatures of the real estate agent’s landlord and tenant. A notice about real estate for quick sale is posted at a real estate agent’s office in an apartment complex in Songpa-gu, Seoul. Dong-A Ilbo DB

According to the revised enforcement ordinance and enforcement regulations, certified real estate agents are required to provide detailed information related to priority rights in order to broker safe rental contracts. This includes the landlord’s unpaid tax status, the status of the granting of a final date, and the status of the household moving in.

The government expected that “by adding this content, it will be possible to identify houses in advance where it is difficult to get the rental deposit back when the lease contract expires, which will help prevent damage from jeonse fraud.”

In fact, until now, real estate agents only had to explain basic information such as the location of the house and the year it was built, as well as information on rights such as ownership, leasehold rights, and mortgages. However, there were many ‘blind spots’ where this alone could not prevent problems such as leasehold fraud.

A typical case is when a house is auctioned because a fraudster fails to pay taxes. Taxes must be paid first when the auction is successful. In other words, since it is a priority, the tenant will lose that amount of deposit. Since the copy of the register does not show whether taxes are in arrears, it is difficult for the tenant to know. This revised enforcement ordinance and enforcement regulations are intended to supplement this.

The revised enforcement ordinance and enforcement regulations also require explanation of tenant protection systems. These include the priority payment right for protecting small tenants and the rental deposit guarantee system for private rental housing. The intention is to strengthen the safety of rental contracts.

Accordingly, first, a licensed real estate agent must confirm the location of the rental property subject to the contract and the amount of the deposit, and then inform the tenant of the scope of small tenants who can be protected regardless of the priority of collateral establishment according to the Housing Lease Protection Act, etc., and the priority payment amount.

In addition, if the rental house subject to the contract is a private rental house according to the ‘Special Act on Private Rental Housing,’ it must be explained that there is an obligation to subscribe to a guarantee for the rental deposit.

In addition, when a real estate agency employee provides on-site guidance to a tenant, the guide must disclose whether the guide is a licensed real estate agent or a real estate agent assistant. In addition, in order to prevent disputes over management fees and prevent management fees from being transferred to monthly rent, the total amount of the management fee for the house to be rented, details included in the management fee, and the method of imposition must be introduced.

These contents should also be organized in the ‘Confirmation and Description of Brokerage Object’ of the lease agreement. In addition, not only the licensed broker, but also the tenant and the landlord are required to sign and stamp. In particular, for the lease confirmation items, a double confirmation procedure was implemented by separately signing and stamping whether or not they were explained.

Regarding this revised enforcement ordinance and enforcement rules of the Real Estate Brokerage Act, there are criticisms in the market that it is too late to establish a system to strengthen the role of real estate brokerage, as it has been only two years since jeonse fraud emerged as a serious social problem.

There are also concerns that the fact that landlords are not required to provide information such as tax arrears to real estate agents before signing a lease agreement may reduce effectiveness. Since landlords are not required to provide relevant information on the grounds that it is their “personal information,” even if they learn of tax arrears through real estate agents after signing a lease agreement, there is no proper way for tenants to respond.

Some voice concerns that this measure will make real estate agents reluctant to act as brokers for multi-family homes and townhouses, which are harder to obtain information about than apartments.

Real estate agent training hours to be significantly increased

The Ministry of Land, Infrastructure and Transport is also planning to prepare and implement a 'Real Estate Education System Improvement Plan' that will significantly increase the training hours for certified real estate agents and real estate agent assistants starting next year. The photo shows a flyer introducing a property posted at a real estate agency in Gangnam-gu, Seoul. Dong-A Ilbo DB

The Ministry of Land, Infrastructure and Transport is also planning to prepare and implement a ‘Real Estate Education System Improvement Plan’ that will significantly increase the training hours for certified real estate agents and real estate agent assistants starting next year. The photo shows a flyer introducing a property posted at a real estate agency in Gangnam-gu, Seoul. Dong-A Ilbo DB

The Ministry of Land, Infrastructure and Transport is also planning to prepare a ‘Measure to Improve the Brokerage Education System’ and implement it starting next year. The goal is to restore public trust in the brokerage industry, which has declined due to involvement in jeonse fraud, by strengthening on-site practical training and ethics education for brokerage workers such as certified real estate agents and brokerage assistants.

The key to the improvement plan is to strengthen the practical training that certified real estate agents must complete. Considering that real estate brokerage has a huge impact on the property rights of the transaction parties, this measure is based on the judgment that certified real estate agents are required to have a high level of professionalism and ethics.

Accordingly, while it is currently possible to open a business by completing only theory-based short-term practical training (28-32 hours), starting next year, the practical training hours will more than double to 64 hours. It is expected that the proportion of education hours for subjects closely related to the property rights of the transaction parties, such as civil law, lease law, rights analysis, and analysis and prevention of transaction accident cases, will increase.

The curriculum will be divided into more detailed areas such as display and advertising of brokerage objects, real estate law by housing and land sector, contract practices, transaction reporting, and real estate finance, and the educational program will be changed to focus on practical training. The continuing education that is to be received every two years after practical training is currently operated flexibly within the range of 12 to 16 hours, but starting next year, it will be unified to 16 hours.

Training for real estate agent assistants will also be strengthened. Currently, only 3 to 4 hours of job training are required before being hired as a real estate agent assistant. After being hired, they can perform the job without additional training.

Starting next year, the training time for real estate agent assistants will be increased to 8 hours. This will strengthen professional ethics education and introduce new subjects such as real estate agent and real estate agent assistant work areas, real estate agent assistant status notification obligations, and on-site guidance techniques.

This type of education can be received at eight universities, including the Korea Real Estate Brokers Association, Konkuk University, Dongguk University, Seoul Venture Graduate School, Korea Cyber ​​University, Shinhan University, Pyeongtaek University, Suwon University, and Daegu Science University. These educational institutions are designated by the provincial governors every two years after reviewing the personnel and facilities required for education.

The Ministry of Land, Infrastructure and Transport also plans to actively promote institutional improvements to advance the real estate brokerage industry and enhance its competitiveness. In particular, it plans to expand the scope of business that can be concurrently operated in order to foster brokerage corporations. Currently, only real estate management agency, real estate transaction consultation, and housing sales agency are available. In addition, it is currently reviewing plans to add land sales agency and financial brokerage.

Demand for a different diagnosis and solution from the government

Real estate agents also believe that they need to change as the public's distrust of real estate agents has increased as real estate fraud has emerged as a social problem. However, they are showing differences in perspectives with the government regarding solutions. The photo shows members of the Gyeonggi Southern Branch of the Korea Real Estate Agents Association holding a resolution meeting to eradicate real estate fraud to protect the people's property rights at the Gyeonggi Economic Science Promotion Agency in Yeongtong-gu, Suwon-si, Gyeonggi-do in April last year. Dong-A Ilbo DB

Real estate agents also believe that they need to change as the public’s distrust of real estate agents has increased as real estate fraud has emerged as a social problem. However, they are showing differences in perspectives with the government regarding solutions. The photo shows members of the Gyeonggi Southern Branch of the Korea Real Estate Agents Association holding a resolution meeting to eradicate real estate fraud to protect the people’s property rights at the Gyeonggi Economic Science Promotion Agency in Yeongtong-gu, Suwon-si, Gyeonggi-do in April last year. Dong-A Ilbo DB

Real estate agents also feel the need for change. However, they appear to have different views on solutions than the government. Above all, they cited the excessive production of real estate agents and excessive government regulation as the biggest obstacles.

This is confirmed in the paper titled ‘Measures to Advance the Real Estate Brokerage Market – Focusing on a Survey of Licensed Real Estate Agents’ presented by Professor Lee Jae-soon of the Venture Management Department at Hoseo University’s Venture Graduate School at the 2024 first half academic conference held by the Korea Real Estate Analysis Association in May.

The paper was written based on the results of an online survey conducted on the website of the Korea Association of Certified Real Estate Brokers from February 18 to March 5 of this year. There were 1,528 respondents, 57.1% (872 people) were male and 42.9% (656 people) were female. The age group was mainly in their 50s (40.4%, 617 people) and 60s and above (37.8%, 577 people).

Most of the respondents were small business owners (98.3%), and the overwhelming majority were CEOs (96.3%). Nearly half of them had brokerage experience of 10 years or more (41.8%), followed by 5 years or more to 10 years (22.5%), less than 3 years (21.4%), and 3 years or more to less than 5 years (14.3%).

Monthly average sales were mostly less than 5 million won (69.8%) and 5 million won to less than 10 million won (22.0%). This means that most domestic real estate agents are at the level of small and medium-sized businesses.

The most common brokerage target for these brokers were apartments (28.7%), followed by single-family and multi-family houses (22.9%), commercial real estate including offices including commercial buildings (21.6%), and land (15.9%). In the case of redevelopment and reconstruction properties, 35.6% were handled by the Seoul regional office, and more than half, 51.3%, of the land was handled by the regional metropolitan office.

Respondents most frequently cited the intensifying competition due to the excessive production of licensed real estate agents (22.1%) as a factor hindering the development of the domestic real estate brokerage industry. Excessive government regulation (19.7%) also received strong support.

Professor Lee Jae-soon explained, “It seems that real estate agents in business are hoping that the government’s improvement of the real estate agent supply and demand system and deregulation will ease competition in the market in the current brokerage environment, and that the quality of the brokerage industry will develop through the realization of brokerage fees and the strengthening of the authority of the real estate agent association.”

The government plans to actively promote the revitalization of real estate brokerage corporations by expanding the scope of concurrent businesses, etc., in order to advance the real estate brokerage industry and enhance its competitiveness. However, the diagnoses of respondents working in the field showed considerable differences in perspectives.

The respondents most frequently cited the reason for the lack of activity in domestic brokerage firms as “large companies are not necessarily needed in the apartment-centered brokerage market” (29.1%). This was followed by “many regulations on business areas, resulting in a poor profit structure” (25.8%) and “low brokerage fees, making them unsuitable for the scale of business that large companies are entering” (20.7%).

Based on these results, Professor Lee Jae-soon proposed the following advanced measures: “improving the supply and demand of qualified personnel – expanding the functions of the Association of Certified Real Estate Brokers – improving the brokerage contract system to establish transaction order – improving the education system to strengthen professionalism – efficient use of transaction information networks – expanding business areas to improve the profit structure.”

Nationwide, more than 18,000 victims of jeonse fraud are going through a painful time, fearing that they will lose their deposits, which are almost all their assets. Above all, the victims are mostly young people in their 20s and 30s who have no experience in real estate transactions. I hope that the public and private sectors will join forces to rationally improve the system so that real estate agents, who are experts, can play their role as assistants.

Reporter Hwang Jae-seong [email protected]

2024-07-14 13:35:54

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