Refund of Duplicate Jeonse Deposit Return Guarantee Fees Starting from the 2nd of Next Month

Duplicate Check and Application on Housing and Urban Guarantee Corporation Website

[Asia Economy Reporter Kangwook Cho] Starting from the 2nd of next month, tenants who are double-subscribed to both the Lease Deposit Guarantee and the Jeonse Deposit Return Guarantee will be able to receive a refund for the Jeonse Deposit Return Guarantee.

The Ministry of Land, Infrastructure and Transport announced on the 29th that it plans to ease the premium burden on tenants who are double-subscribed to the Lease Deposit Guarantee and the Jeonse Deposit Return Guarantee by improving the Jeonse Deposit Return Guarantee system of the Housing and Urban Guarantee Corporation (HUG).

Since the mandatory subscription to the Lease Deposit Guarantee for existing landlords was fully enforced from August this year, a problem arose where tenants living in rental housing subscribed to the HUG Lease Deposit Guarantee had to pay premiums twice if they individually subscribed to the HUG Jeonse Deposit Return Guarantee. For the Lease Deposit Guarantee (subscribed by the landlord), the landlord pays 75% of the premium and the tenant pays 25%, while for the Jeonse Deposit Return Guarantee (subscribed by the tenant), the tenant bears the entire premium.

Accordingly, the Ministry of Land, Infrastructure and Transport and HUG plan to refund premiums to the relevant tenants considering the scope and period of the overlapping subscriptions. However, taking into account the characteristics of the Lease Deposit Guarantee, which is renewed annually and whose deposit amount may change, the calculation and refund of the premium will be carried out when the guarantee period expires or the guarantee is canceled.

For example, in the case of a tenant deposit of 300 million KRW (APT), a Jeonse Deposit Return Guarantee amount of 300 million KRW, a Lease Deposit Guarantee amount of 100 million KRW, and an overlapping period of 9 months, the refundable premium is calculated by multiplying the overlapping subscription amount (100 million KRW) by the Jeonse Deposit Return Guarantee premium rate (0.128%) and the annual overlapping period ratio (270 days/365 days), resulting in 94,680 KRW. However, since the refund premium is calculated based on the premium rate and social welfare discount rate applied at the time of issuing the Jeonse Deposit Return Guarantee, the refund amount may vary for each individual tenant.

The improvements to the Jeonse Deposit Return Guarantee system will be implemented from the 2nd of next month, and tenants can check for overlapping subscriptions on the HUG website. Refund applications can be made through the window where the Jeonse Deposit Return Guarantee was subscribed when the guarantee period expires or the guarantee is canceled. Even if the guarantee expired or was canceled before the system improvement, refunds will be retroactively processed for premiums paid in overlap in the past.