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29 Mar, 2021 11:52

South Korea’s president sacks top economic aide for sharply raising rent amid housing crisis

South Korea’s president sacks top economic aide for sharply raising rent amid housing crisis

A top economic aide for the South Korean president has been forced to step down after it emerged the official sharply increased rent on his Seoul apartment just a few days before legislation to cap such increases was introduced.

South Korean President Moon Jae-in fired his top economic policy adviser Kim Sang-jo on Monday. The decision came “in consideration of the very grave situation connected with real estate,” a senior official with the presidency told local media.

“I am very sorry that I’ve disappointed the people at this grave time when we should be making all-out efforts to root out real estate speculation,” Kim told a news briefing.

Earlier in the day, multiple Korean outlets reported that Kim sharply hiked rent on his apartment in Seoul by 14% last July. The bold hike came just two days before legislation capping such increases at 5% was introduced.

The South Korean real estate lease system is quite different from the one used in the West. Instead of paying monthly rent, a tenant gives the landlord a fixed lump sum, known as jeonse, that ranges from 50 to 80 percent of the property’s market value. The tenant then lives rent-free for a fixed amount of lime – usually two years – while the landlord can invest the jeonse and keep the interest. The lump sum is returned to the tenant when the rental contract is over.

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In Kim’s case, the jeonse reportedly reached an eye-watering sum of 970 million won (US$856,000) after the cheeky 14 percent hike. The official offered his resignation late last year amid falling public support for the president, yet the request was turned down by Moon back then.

South Korea, and Seoul in particular, have endured a housing crisis over the past few years. Since 2017, home prices in Seoul have grown by more than 50% according to statistics site Numbeo. Housing affordability issues have been a major concern in the country, affecting the approval ratings of Moon and his government.

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