Retroactive legislation on the conversion of rental house to sales

The preferential sale conversion system was introduced to help rental housing tenants who did not own a home acquire the house they were living in, provided they met certain conditions. This system aimed to facilitate homeownership by prioritizing eligible tenants in the purchase of rental homes. However, as some qualified tenants were unable to afford the conversion price, a new policy was implemented allowing them to purchase housing at a lower preferential sale conversion price. The Supreme Court ruled that when a rental house occupied by an ineligible tenant was sold to a third party, it could be sold at the market price. Additionally, the Court determined that even tenants who moved in through a first-come, first-served system must have satisfied the requirement of being completely houseless at the time of move-in. This decision aligns with the wording of the former Rental Housing Act and the legislative intent of the preferential sale conversion system. However, these Supreme Court rulings contradicted previous interpretations by the Ministry of Land, Infrastructure, and Transport. Following these rulings, the Ministry enacted retroactive legislation through the revised Special Act on Public Housing to reinforce its original interpretation. Consequently, even when an ineligible tenant’s rental home is sold to a third party, it must now be sold at or below the preferential conversion price. Furthermore, this legislation allows tenants who moved in through the first-come, first-serve method to qualify for preferential sale conversion if they met the houseless requirement at the time of conversion, even if they did not meet this requirement at the time of moving in. This retroactive legislation contradicts the original legislative intent of the preferential sale conversion system and significantly restricts the property rights of rental business operators. Therefore, a constitutional interpretation is required to narrow the scope of its application. Meanwhile, following the implementation of the revised Special Act on Public Housing, lower courts have issued conflicting rulings regarding whether tenants who already own homes qualify for preferential sale conversion when a public rental housing unit constructed by a private rental business face bankruptcy or insolvency. Considering the wording of the revised Special Act on Public Housing and the legislative history of amendments to the supplementary provisions of the Special Act on Private Rental Housing, it is reasonable to conclude that, even in cases of bankruptcy or insolvency, tenants who own homes should no longer be eligible for preferential sale conversion.