These days it is common practice to use online property platforms to get easy access to information on a vast amount of available apartments, houses and other property listings. Landlords can lease homes via online platforms accessible by potential tenants no matter where they are.
Then a law which will stunt this trendy mode of business is looming on the horizon.
Kim Byung-wook, a National Assembly member of the main opposition Democratic Party of Korea, proposed a bill to revise the Realtors Act. Twenty-three other lawmakers including a few from the ruling People Power Party have sponsored it.
The bill requires about 500,000 licensed real estate agents across the country to join the association. Currently, it has about 120,000 realtors as members.
The bill designates the private association as a statutory body and authorizes it to instruct and supervise its members so it can respond rapidly to market disturbances.
However, if the revised law is enforced, it will provide a legal basis for the association to be able to move against those realtors who cooperate with property technology services, under the pretext of cracking down on market disturbing behavior.
This raises concerns that fledgling online services will wither.
The association will likely prevent its members from making deals with proptech firms, such as placing online advertising, like the Korean Bar Association that banned its member attorneys from using LawTalk, an online service that connects clients and lawyers.
The association argues that crackdowns will only target illegal behavior by unregistered realtors and vows not to obstruct technological innovation.
But it is questionable if it will do so. The association has requested the prosecution on several occasions to investigate an online service that charges half of the statutory maximum brokerage commissions.
If the association is allowed to regulate the market, conflict of interests with new forms of nonmember online services will be inevitable.
Last year, the Fair Trade Commission opposed a similar bill on the grounds that if a certain association obtained a monopolistic status and authority, it could end up hurting businesses and restricting competition.
More than 5 million people use proptech services each month. The firms grafted big data and virtual reality technologies onto the process of transaction. Consumers showed a fervent response to their services. The bill, if passed, would endanger their survival.
The bill is likely to follow the footsteps of one that drove Tada, a rental van-hailing service, out of the market.
With the popularity of Tada rising, taxi drivers and companies reacted strongly against the new service. The then ruling Democratic Party lawmakers effectively bowed to taxi drivers' pressure, passing a bill banning the alternative to regular taxis in March 2020. It outlawed vans from carrying passengers beyond the purpose of tours.
The law stifled competition under the pretext of protecting the taxi industry. The quality of taxi service, however, has seldom improved. To make matters worse, many taxi drivers changed jobs in the early days of the COVID-19 pandemic.
Two years after the ban on Tada, late-night taxi shortages have become so acute that the government had to take emergency measures. It hiked fares for calling late-night taxis and allowed taxi drivers to work part time for a few late-night hours. It is also working on ways to expand ride-hailing platforms.
Like many countries that are active in adopting technological innovations, Korean entrepreneurs are trying new business models in domestic markets to utilize digital innovations such as artificial intelligence and big data.
Property technology firms offer convenient services that traditional real estate agents hardly provide, and moreover, for lower commissions.
And yet due to the resistance of those market players seeking to defend their vested rights and the politicians trying to curry favor with them for their votes, innovation is being nipped in the bud.
If the nation keeps going against technological innovation to follow populism, consumers will pay the price and its economy and industries will fall behind.