Won Hee-ryong "Urgent Measures Needed to Support Victims of Jeonse Fraud"

Concerns Rise Over Jeonse to Monthly Rent Conversions and Empty Jeonse Losses
Minister of Land, Infrastructure and Transport: "Protecting Tenants is the Nation's Duty"

<사진=Photo by Yonhap News>

As the jeonse (long-term lease) market experiences a shortage due to the shift from jeonse to monthly rent, incidents and accidents related to security deposits are also increasing, prompting Won Hee-ryong, Minister of Land, Infrastructure and Transport, to conduct an emergency inspection. Minister Won announced plans to prepare comprehensive measures to prevent jeonse fraud and support victims.

The Ministry of Land, Infrastructure and Transport stated that on the 2nd, Minister Won visited the Housing and Urban Guarantee Corporation (HUG) Seoul Northern Management Center to meet with victims of jeonse fraud, licensed real estate agents, and related experts to discuss the current status of jeonse fraud damage and prevention measures.

With the recent increase in jeonse demand, the jeonse price ratio has risen and incidents related to security deposits have increased, creating an unstable jeonse market. At the site, victims of jeonse fraud openly shared their damage status and testimonies. Representing the main victims of jeonse fraud, the 20s and 30s generation, Ji-su, a committee member of the Mindalpengi Union, demanded, "Please prepare promotional measures to prevent jeonse fraud for the youth generation and support measures to increase the subscription rate of jeonse guarantees."

Minister Won said, "It is the nation's important responsibility to safely protect tenants' precious jeonse security deposits from jeonse fraud," adding, "Especially for the 20s and 30s generation, who are the main victims of jeonse fraud, we will reduce the burden of guarantee fees to increase the subscription rate of jeonse guarantees and widely disseminate specific cases of damage and prevention measures."

Furthermore, Minister Won announced swift government-level measures. He said, "We will announce comprehensive measures for jeonse fraud prevention and support as soon as possible, including ways for victims of jeonse fraud to receive appropriate support." He also urged the National Assembly to promptly pass the currently pending 'Malicious Landlord Disclosure Act' and requested HUG to actively play a role in preventing and remedying jeonse fraud by quickly establishing a jeonse damage support center.

Meanwhile, according to monthly time-series statistics from KB Kookmin Bank, the nationwide apartment jeonse price ratio (jeonse price compared to sale price) has increased for three consecutive months, from 65.9% in December last year to 66.2% in March this year. This is due to the stagnation of sale prices caused by the peak house price theory and loan regulations, while jeonse prices have risen rapidly. In some areas, the gap has narrowed, leading to a surge in 'empty jeonse' cases where the jeonse price is higher than the sale price.

The amount of jeonse deposit return guarantee insurance claims has also surged this year. According to HUG, the amount of jeonse deposit return guarantee claims in the first quarter (January to March) of this year was 139.1 billion KRW, an increase of 26.4 billion KRW compared to 112.7 billion KRW in the first quarter of last year, when the annual claim amount was the highest ever at 579 billion KRW.