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South Korea to convert buildings into apartments to address rental home shortages

SEOUL (REUTERS) – South Korea’s finance minister said on Thursday (Nov 19) the government will buy properties to convert them into public housing to address a shortage of rental homes across the nation.

Speaking at a policy meeting, Mr Hong Nam-ki said the government plans to add 114,000 homes for public housing on lease within the next two years.

The proposal adds to more than 23 measures by Moon Jae-in administration since 2017 to cool soaring home prices as both sales and rent prices surge despite tighter mortgage curbs and heavier real estate taxes.

Earlier measures included easing building height limits and converting military sites into residential areas, which failed to swiftly address home shortages.

“Policies this time are focusing on fast increasing homes that could be rented out, not restricting demand, to meet demand for Jeonse properties,” Mr Hong said.

Jeonse is a lump-sum returnable deposit paid instead of monthly rent for leasing a residential property for about two to four years in South Korea.

Since July, the Housing Lease Protection Act capped increases of “jeonse” deposits at 5 per cent and allowed tenants to extend standard two-year contracts for another two, unless landlords themselves move into the property.

The Act led to an unprecedented shortage of jeonse housing nationwide as landlords sought to empty properties ahead of July implementation so they could increase deposits for new tenants, expecting not to be able to raise them again for four years.

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