Park Jae-hyuk is a seasoned journalist who has provided comprehensive coverage of South Korea's corporate dynamics, economic policies, industry challenges and the global positioning of Korean companies. Based on the articles he has written since joining The Korea Times in 2016, his investigative approach has helped readers understand corporate governance, economic trends and business strategies shaping South Korea’s economy.
Korea can be used as haven for foreign landlords
By Park Jae-hyuk
By Park Jae-hyuk
The government is facing calls to prevent foreign landlords from fleeing abroad without returning rental deposits to their tenants, after it was revealed that some were able to use loopholes in domestic real estate laws.
Amid looming concerns over real estate speculation by foreigners, lawmakers said a revision of the law is strongly-required to prohibit non-Korean landlords from leaving the country without returning deposits.
According to data the Korea Housing & Urban Guarantee Corporation (HUG) gave to Rep. So Byung-hoon of the ruling Democratic Party of Korea (DPK), three foreign landlords registered to operate a housing rental business attempted to pocket a combined 520 million won ($456,000).
The data showed two of them surnamed Chung and Roh had refused to return a respective 250 million won in Seoul and 160 million won in Gyeonggi Province. After HUG returned the money to tenants on behalf of them, the state-run agency managed to collect the same amount of money back.
Another foreign landlord in Busan, only known by his surname “K,” however, has yet to pay 110 million won, which the government agency gave to a tenant on his behalf. If he leaves Korea with his assets, the HUG has no way to retrieve the money, losing taxpayers' money as a result.
Data from the Ministry of Land, Infrastructure and Transport given to Rep. So showed the number of foreign landlords registered as businesses rose to 2,448 in June this year from 1,974 in December 2018. The number of apartments they own soared to 6,650 from 5,792 during the same period.
The lawmaker called for swift measures to prevent similar incident's to K's case, but tenants can still risk losing their money, if foreign landlords lease them apartments without being registered as businesses.
“Tenants are not allowed to take out insurances that guarantee rental deposits if they rent their houses from individual foreign landlords who are not registered as businesses,” an HUG spokesman said.
This means tenants cannot get their money back from HUG, when their foreign landlords leave the country without returning their deposits.
“The land ministry needs to check how many unregistered foreign landlords did not return rental deposits to their tenants,” Rep. So said. “Tenants should also be allowed to be assured their deposits will be returned, even if their foreign landlords are not registered as businesses.”
Separate data showed a U.S. national owning 42 apartments here is assumed to have borrowed 840 million won from HUG in an apparent bid for real estate speculation.
With one apartment in Seoul, 20 in Gyeonggi Province, 10 in Incheon, five in North Chungheong Province and six in South Chungcheong Province, the American was found to own the sixth-largest number of houses among non-Korean landlords here.
The landlord has been investigated by the National Tax Service (NTS) since August after the agency found out the 46-year-old did not have enough income and assets to purchase such a large number of apartments. The NTS also discovered evidence showing his attempts to conceal part of the rental income from those apartments.
“The government still lacks statistics on the number of houses owned by foreigners which can be used as baseline data to regulate real estate speculation by foreigners,” Rep. Kim Hoi-jae of the DPK said in a recent National Assembly audit of the tax agency. “It should collect the statistics as soon as possible.”