Starting in June, fines will be imposed if housing rental contracts are not reported.
The Ministry of Land, Infrastructure and Transport noted that the amendment to the Enforcement Decree of the Act on Reporting Real Estate Transactions, which eases the criteria for imposing fines on housing rental contract reporting, will be announced and take effect on April 29, and the grace period during which fines are not imposed will end on May 31.
The housing rental contract reporting system requires reporting of contracts exceeding a deposit of 60 million won or a monthly rent of 300,000 won (excluding areas outside Gyeonggi Province) within 30 days. It was introduced in August 2020 to make real transaction information in the housing rental market transparent and to overcome information asymmetry between landlords and tenants, and it began implementation in June 2021.
The Ministry of Land, Infrastructure and Transport has operated a grace period over the past four years, during which no fines were imposed, considering the burden on citizens and administrative conditions, even if housing rental contracts were not reported.
The Ministry of Land, Infrastructure and Transport will not extend the grace period after May 31 and will begin to fully implement fines starting in June. This is due to the continuous increase in the reporting rate of rental contracts, which reached 95.8% last year. In addition, the enhancement of the Real Estate Transaction Management System (RTMS), including the introduction of mobile reporting functions, has been completed, leading to the belief that the foundation for embedding the system has been sufficiently established.
Moreover, since a long grace period has been operated compared to other fines-imposing systems, the plan is to encourage reporting of rental contracts through the imposition of fines rather than extending the grace period and to promote the establishment of a transparent transaction order.
Before the implementation of fines, the Ministry of Land, Infrastructure and Transport has also completed a significant reduction in the fines criteria. The amendments to the enforcement decree, which will be announced on the 29th of this month, include measures to relax the criteria for fines imposed for violating the reporting obligation within 30 days after the rental contract. The fines have been significantly reduced from a minimum of 40,000 won to a maximum of 1 million won, to a minimum of 20,000 won and a maximum of 300,000 won. This is to alleviate the burden on low-income individuals who delayed reporting due to simple mistakes and to differentiate from fraudulent reports that are highly intentional.
The Ministry of Land, Infrastructure and Transport, in cooperation with the Korea Real Estate Board, which is the entrusted agency for the establishment and operation of the real estate information system, has decided to actively promote the public during May, designated as a 'focus promotional period' before the official implementation of fines.
In particular, to avoid confusion in the early stages of implementation, various online and offline promotional channels will be utilized, and education sessions will be conducted for real estate agents in collaboration with the Korea Real Estate Association and for local government officials in collaboration with the Ministry of Justice during the first half of the year. Additionally, an automatic notification will be sent starting in May to inform individuals who only request the issuance of a confirmed date at the Community Service Center, without reporting the rental contract, that they are required to report.
As a result of this Ministry of Land, Infrastructure and Transport policy, local governments will be allowed to impose fines starting in June for violations of the rental contract reporting obligation, but actual fines will begin to be imposed only after July. To minimize public confusion, contracts signed during the grace period will be excluded from fines, and contracts signed after June 1 of this year will be subject to fines if not reported within 30 days or reported falsely.
Both landlords and tenants have an obligation to report the rental contract, but if one party reports and submits the signed contract, it is considered a joint report. Reporting can be done by visiting local administrative welfare centers, and mobile reporting is also available through the real estate transaction management system using simplified authentication.
Kim Heon-jeong, Director of Housing Policy at the Ministry of Land, Infrastructure and Transport, said, "The implementation of these fines is an inevitable decision for the establishment of the housing rental contract reporting system," adding, "We will further reduce the number of individuals subject to fines through improvements in reporting convenience and concentrated promotion, and will continue to develop the positive functions that contribute to the protection of tenant rights, such as automatic issuance of confirmed dates and the alleviation of information asymmetry."