President Moon Jae-in replaced Kim Sang-jo, his top Cheong Wa Dae aide on policy, Monday, Moon's office announced amid a controversy over the leasing of his apartment in southern Seoul.

Moon promoted Lee Ho-seung, senior secretary for economic affairs, to the post of handling policy at the presidential office, according to You Young-min, presidential chief of staff.

Moon's decision came "in consideration of the very grave situation connected with real estate," a senior Cheong Wa Dae told reporters later on background.

Kim "expressed strong intent" on stepping down, saying it is inappropriate for him to continue his work amid a dispute over his own apartment lease, added the official, who spoke on the customary condition of anonymity.

Kim has been in charge of overall policy issues, including the government's efforts to stabilize the real estate market.

Earlier in the day, multiple news outlets reported that Kim signed a contract to hike the "jeonse" fee of his apartment by 14 percent to 970 million won ($856,000), just a couple of days before the introduction of new legislation to limit such an increase to as much as 5 percent.

In the home rent system unique to South Korea, tenants lend a sum of money, called jeonse, to landlords instead of paying monthly rent.

Many South Koreans are in an uproar, with home prices and rent having skyrocketed especially in and around Seoul since the launch of the Moon administration in 2017.

The property issue has emerged the hottest agenda in the April 7 Seoul and Busan mayoral by-elections.

Kim tendered his resignation late last year amid falling public support for the president.

At that time, however, Moon rejected it, instructing him to finish such crucial policy tasks as another round of emergency relief cash handouts and the vaccination campaign against the COVID-19 pandemic. (Yonhap)