South Korea to Require Reporting of Management Fees in Rental Contracts

Landlords in South Korea will soon be required to report the exact amounts and calculation methods for management fees and option usage charges when registering rental contracts. This move aims to curb the practice of landlords using these fees as a disguised method to increase rent, a loophole that has become increasingly common.

The Ministry of Land, Infrastructure, and Transport announced on Tuesday that revisions to the enforcement decree and rules of the Special Act on Private Rental Housing will be open for public comment from July 14 to August 24. The updated regulations are designed to bolster transparency in the management of private rental housing and strengthen oversight.

Currently, landlords only report rental duration, rent amounts, loan details, and tenant information. The new rules will mandate the inclusion of management fees and option usage fees, such as those for appliances, furniture, or built-in air conditioning, in the contract registration. Standard rental contracts will also be revised to clearly state these charges from the outset of the lease.

Furthermore, tenants or tenant representative councils will gain the right to request accounting audits of management and usage fees from landlords. Landlords will be prohibited from refusing such requests without a justifiable reason. The authority of provincial and metropolitan governments in managing private rental housing will also be expanded. They will be empowered to set rent increase ratios for private rental housing complexes with 100 or more units through local ordinances and to access information on rental deposit guarantee subscriptions via the "Rent Home" system. This expansion allows provincial governments to enact ordinances and review subscription information, powers previously limited to local governments.

Landlords' reported rental terms will also be publicly announced on an official website, moving beyond the current practice of only publishing them in local government gazettes. To address concerns about excessive fines for minor violations, such as simple omissions in rental contract reporting, the penalty structure has been adjusted. The first violation fine has been reduced from 5 million won to 3 million won, and the second violation fine from 7 million won to 5 million won.

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This revision is expected to enhance the transparency of management fees and usage fees for private rental housing and strengthen tenant housing stability.