[Exclusive] 2030 Target Jeonse Deposit 'Eat-and-Run' Surges... Subrogation Payment Quadruples in 2 Years

Compared to 2 Years Ago, Fourfold Increase in Jeonse Substitute Payment for 20s
New Villas and Officetels Prone to Reverse Jeonse Crisis
High Residential Density... Structure Easily Exposed to Jeonse Fraud

[Asia Economy Reporters Chae-eun Koo, Min-young Kim] It has been revealed that the amount of money paid by guarantee companies on behalf of tenants in their 20s, who are just starting their social lives, due to landlords defaulting on their jeonse deposits, is skyrocketing. Victims who fail to receive their deposits back on time due to "empty jeonse" or jeonse fraud are concentrated among the housing-vulnerable group of people in their 20s.

According to the national audit data (amount of subrogation payment by tenant age) submitted by the Housing and Urban Guarantee Corporation (HUG) to Rep. Chang-hyun Yoon of the People Power Party, commissioned by Asia Economy on the 30th, the subrogation payment amount for those in their 20s reached 63.33 billion KRW as of July this year. This is more than four times the amount from two years ago in 2020 (15.63 billion KRW). The subrogation amount this year nearly matched the total subrogation amount for the entire previous year (65.06 billion KRW) in just seven months.

Among those in their 30s, who include the largest number of newlyweds, the amount of deposits recovered from the government after landlords defaulted on jeonse deposits is also increasing. As of July, the subrogation payment amount for people in their 30s was 171.9 billion KRW. This increased from 70.7 billion KRW in 2019 to 180.8 billion KRW in 2020, and 248.2 billion KRW in 2021. The number of cases of deposit non-return accidents reported to HUG (cumulative from 2018 to July this year) was highest among those in their 30s at 4,287 cases, followed by those in their 40s (2,032 cases), 20s (1,358 cases), 60s (370 cases), and 70s (86 cases).

[Image source=Yonhap News]

The high number of jeonse deposit-related incidents among people in their 20s and 30s, who are mostly young adults and newlyweds, is analyzed to be due to the fact that they are more likely to live in newly built villas and officetels, which are relatively more exposed to the "reverse jeonse" problem. In the case of newly built villas, there is no transaction information, making it difficult to estimate the appropriate market price. Even if an "empty jeonse" is offered with a jeonse price set higher than the sale price, many people unknowingly agree to the transaction. Jeonse fraud is also prone to surge in this age group. Professor Jin-hyung Seo of Gyeongin Women's University (co-representative of the Fair Housing Forum) analyzed, "People in their 20s and 30s tend to lack rights analysis and real estate transaction experience and include many housing-vulnerable groups, making them easy victims of such fraud."

Rep. Chang-hyun Yoon of the People Power Party said, "The worsening jeonse insecurity among young people has been confirmed by statistics," and added, "The government should focus policy efforts on reducing situations that lead to subrogation payments, such as establishing a system to verify the landlord's financial status before contract signing."

Meanwhile, the combined subrogation payment amount of the three companies handling jeonse return guarantee products?HUG, SGI Seoul Guarantee, and Korea Housing Finance Corporation?increased from 438.9 billion KRW in 2019 to 572.4 billion KRW in 2020, then slightly decreased to 551.5 billion KRW last year. However, this year, it recorded 367.3 billion KRW in just seven months, and the trend suggests it will break the record high.