Seoul apartments are seen from Namsan. (Yonhap)
Maximum real estate brokerage fees were lowered by almost 50 percent starting on October 19, when a law designed to mitigate the effects of soaring housing prices took effect.
For those selling or buying homes worth more than 1 billion won ($850,000), real estate agents can receive commissions of up to 5 million won instead of the previous 9 million won, under the new guidelines. For “jeonse” and monthly rental contracts for properties worth over 1 billion won, agents can demand brokerage fees of up to 4 million won instead of 8 million won. Brokerage fees in South Korea are negotiable, and price ceilings depend on the kind of transaction and the value of the property.
Housing prices have skyrocketed as a result of government regulations intended to control prices, market insiders say. Agency fees have risen accordingly.
The ministry requested that real estate agencies and local governments fully comply with the new regulations to lower the pressure on homebuyers and to prevent any market disruptions.
Experts are somewhat skeptical about the new law and how it might affect the majority of homebuyers.
“The housing contracts of less than 600 million won account for 86 percent of all transactions. However, the real estate agency fees for those contracts remained unchanged. That means homebuyers outside Seoul and metropolitan cities cannot enjoy the premium cuts,” said Kim In-man, head of the Kim In-man Real Estate Research Center.
The Korea Association of Realtors objected to the change and said it would file a constitutional appeal and seek an injunction from the Administrative Court.
By Byun Hye-jin (email@example.com)