Fixing the housing rental market.

Presidents Park's government is grappling with how to fix the housing rental market in Korea. 

The Joense system is unique to Korea and may I humbly suggest it is unique to Korea for a very good reason.  It would be illegal in Australia and probably other countries as well, plus I give you my life savings, plus take a bank loan so I can live in your house.  Why wouldn't I just buy my own place?

This is the problem tenants believed they were living rent free, landlords believed they were getting free money and at the end of the 2 year contract they would get a higher payment from the next tenant so they could spend the lump sum of cash and it worked beautifully where house prices were rising. Unfortunately due to inadequate immigration and a low birth rate, the population is stagnating.

The Fix
This is quite radical and will result in screams from many, but here goes.  Introduce a maximum rental deposit of 2 months rent and deem monthly rent is being collected and make this deemed amount taxable income for property owners who aren't living in the property.  Convert all Jeonse loans to mortgages and transfer all property ownership to the Jeonse holder.  If there is a shortfall between the the Jeonse amount and the value of the property, then increase the mortgage loan limit to 80% and possibly allow mortgage insurance to cover up to 10% more.

To encourage people on the benefits of property ownership, remove all purchase taxes and fees for first home buyers of existing homes and possibly make a grant available to first home buyers.  The reason for specifying existing homes is the government does not want to start another apartment building boom.

Finally change the taxation system to allow non-Koreans the same tax deductions on rent and mortgages that Korean citizens get.  This primarily concerns households where a non-Korean man is married to a Korean woman and the man is the sole wage earner.  He cannot be head of household because he isn't Korean and the wife (officially head of the household) doesn't have an income to claim a tax deduction on.

Obviously this needs more detail, but Jeonse has turned into a Ponzi scheme that could be hugely detrimental to the Korean economy if drastic measures aren't taken.  It has the potential to make 1997 look like a mild cold.