Evict a tenant to move in, then let to someone else, and you owe damages
A landlord who refuses renewal on the ground of moving in, then lets to a third party before the renewed term would have expired, must compensate the tenant absent a legitimate reason.
Conditions used in the video
- Window to demand renewal
- 6 months to 2 months before expiry
- Times exercisable
- once only
- Term secured by renewal
- 2 years
- Increase cap
- 5% (statutory maximum)
- Restriction on increases
- none within a year of the last increase
Results
- Renewal window
- 6 to 2 months before expiry
- Term secured
- 2 years (the 2+2 structure)
- Grounds for refusal
- nine
- Cap on rent increases
- 5%
- Where the occupancy ground is abused
- the greatest of three measures
At a glance
An illustration: a ₩300M deposit with ₩1M monthly rent, re-let by the landlord at ₩1.5M. Actual amounts vary with the converted monthly rent and the facts.
- ① 3 months of converted monthly rent₩3M
- ② 2 years of the difference (₩500,000 × 24)₩12M
largest here, so it governs
- ③ Actual loss sufferedcase by case
Why it works this way
A tenant has the right to demand one further extension of the lease. This is the renewal right. The landlord cannot refuse it without a ground set out in the statute.
It cannot be demanded at any time, though. Only between six months and two months before the lease expires. Miss that window and the right itself is gone. Speaking too early counts no more than speaking too late.
Count backwards from the expiry date.
- 6 months before expirywindow opens
- 2 months before expirywindow closes
- After thatthe right lapses
Safer to count back from the expiry date on the contract and mark it on a calendar. The window is only four months wide.
Renewal secures a further two years. The initial two plus the renewed two is what people call the 2+2 structure. But the right can be used once only. There is no second demand. After that you negotiate afresh with the landlord.
A renewed lease is on the same terms as before, with rent the one exception, and even that is capped. It cannot rise by more than 5% of the previous figure, and it cannot rise at all if less than a year has passed since the last increase.
One point to note. The 5% is the statutory maximum. A metropolitan city or province may set a lower cap by ordinance. Check the ordinance for the area before signing.
The grounds on which a landlord may refuse renewal number nine: rent in arrears amounting to two periods; the lease obtained by improper means; agreement reached with substantial compensation; sub-letting without consent; damage to the property through intent or gross negligence; destruction of the property such that the purpose of the lease cannot be achieved; recovery of possession needed for demolition or reconstruction; the landlord or a lineal relative intending to live there; and any other serious ground making continuation of the lease difficult.
The second-to-last of those, the occupancy ground, carries a further condition attached: refuse renewal on the ground of moving in, and you must actually live there.
Where the stated reason and the actual conduct diverge, damages follow.
- Renewal refused to move in
- Before the renewed term would have expiredlet to a third party
- Absent a legitimate reasondamages
Absent agreement, damages are the greatest of three measures: ① three months of the converted monthly rent as at refusal; ② two years of the difference between the converted monthly rent obtained from the third party and that as at refusal; ③ the loss the tenant actually suffered.
The converted monthly rent adds the deposit, translated into a monthly figure. The lower of the statutory conversion rates applies for that purpose.
Damages are not automatic, though. A landlord with a legitimate reason may be excused, and a dispute goes to the housing lease dispute conciliation committee or to court. Establishing that the landlord did not in fact live there and let to a third party is also the tenant's task. The property register or the record of fixed date stamps will show it.
What the tenant should do first comes down to one thing: look at the expiry date on the contract and mark six months and two months before it on a calendar. The right is alive only inside that window.
The legal basis
Drawn from government announcements and the statutes themselves as primary sources, covering only the relevant part.
주택임대차보호법 제6조의3 (the renewal right)
In force in force
A tenant may demand renewal between six months and two months before expiry, and the landlord may not refuse without a legitimate ground. It may be exercised once only, and the renewed lease runs for two years. The nine grounds for refusal are set out in the items of 제1항 of the same article.
What this means
The period in which the demand can be made is fixed. Miss it and the right is gone, so count back from the expiry date on the contract and mark it in advance.
주택임대차보호법 제6조의3제5항·제6항 (abuse of the occupancy ground)
In force in force
Where a landlord refuses renewal on the ground of occupying the property and then, without legitimate reason, lets it to a third party before the renewed term would have expired, the landlord must compensate the tenant. Absent agreement, damages are the greatest of ① three months of the converted monthly rent as at refusal, ② two years of the difference between the converted monthly rent obtained from the third party and that as at refusal, and ③ the loss actually suffered.
What this means
Occupancy is a ground for refusal, but a conditional one. Not living there as stated and letting the property again is itself the basis for damages.
주택임대차보호법 제7조 (claims to increase or reduce rent)
In force in force
No increase may be claimed within one year of the lease or of an agreed increase, and it may not exceed one-twentieth of the agreed rent or deposit. A metropolitan city, special self-governing city, province or special self-governing province may set a different cap within that range by ordinance.
What this means
The 5% is the statutory maximum. A local authority may set it lower by ordinance, so check the ordinance for the area before signing.
Run it on your own numbers
The calculator opens with these conditions already filled in. Change the figures and your own case comes straight out.
Open the Rent Increase Cap Calculator
Frequently asked
By when must I demand renewal?
Between six months and two months before the lease expires. Speaking too early counts no more than speaking with less than two months left. Count back from the expiry date on the contract and mark it on a calendar.
Can I demand renewal twice?
No, once only. Renewal secures two years, and after that you negotiate afresh with the landlord.
What if the landlord asks for more than 5%?
5% is the statutory cap, so a claim above it has no effect. A local ordinance may also set it below 5%, so check the standard for the area. And if less than a year has passed since the last increase, no increase is possible at all.
If the landlord says they will live there, must I leave?
Occupancy is a statutory ground for refusal, so in itself it is legitimate. But they must actually live there. Letting to a third party without legitimate reason before the renewed term would have expired gives rise to damages.
How do I establish that they let it out instead?
The property register or the record of fixed date stamps will show whether a new lease has been created. Establishing it is the tenant's task, and damages are not automatic. A dispute goes to the housing lease dispute conciliation committee or to court.
How much are the damages?
Absent agreement, the greatest of three measures: three months of the converted monthly rent, two years of the difference against the new rent, and the loss actually suffered. Re-letting at a much higher rent enlarges the second measure. The actual figure depends on the converted monthly rent and the facts, so take advice.
Results are estimates based on the inputs and on the rules as at the stated date. They may differ from a lender's actual assessment, and the rules change often. Take professional advice before any decision that matters.