eFM News

The South Korean government says it will purchase properties that will be converted into 114,000 public housing units by 2022 to help tackle rental home shortages across the country.

The Ministry of Land, Infrastructure and Transport issued a statement Thursday explaining that existing homes will be converted into public jeonse houses, or two-year contract-based rental homes.

They will mainly be for the underprivileged who have difficulty finding such housing, as higher demand has pushed up jeonse prices amid low rates and recently passed laws that limit the rights of landlords and allows tenants to extend their two-year jeonse contracts for another two years.

Under the plan, over 40 percent, or 49,000 of the planned homes will be provided by the first half of 2021.

The government said it will supply some public homes that have been vacant for more than three months as jeonse houses by early next year and convert vacant offices, hotels and shopping malls into jeonse homes late next year.

Jeonse is a property lease system unique to Korea in which tenants pay a large deposit instead of monthly rent, with the landlord paying back the principal upon the completion of the contract.

In July, new tenant protection laws went into effect as the government sought to enhance tenants' rights in the face of rising home prices.

Rather than stabilizing the jeonse home lease market, the revised laws have pushed up jeonse prices in recent months, as a growing number of home owners chose to move in or existing tenants exercised their right to renew their leasing contracts.