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South Korea: Effectiveness of Amendments to Enforcement Decrees of the...
Public Health Control Act Legalizing Serviced Residences
Serviced residences combine features of the hotel business and short-term leasing business and typically target medium or long-term guests. On April 15, 2010, the Supreme Court ruled that operating a serviced residence constitutes accommodation business rather than real estate leasing business and therefore the operation of a serviced residence without reporting itself as an accommodation business was illegal.
This ruling left many service residences equipped with cooking equipment in their units in a difficult position as there was no legal ground under the Public Health Control Act to report accommodation businesses with cooking equipment installed in each unit. In response, effective as of January 10, 2012, certain amendments to the Enforcement Decrees of the Public Health Control Act (the "Amendments") introduced a new category of living accommodation business, which includes accommodation facilities equipped with cooking equipment, thus providing a legal ground for reporting serviced residences equipped with cooking equipment.
Serviced residences are popular with both long term travelers and short term tourists, not only because they tend to be cheaper than premium hotels but also because they provide laundry, kitchen and dining facilities. Serviced residences are expected to receive increasing attention as investments offering stable income to its investors.
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