[Ryu Taemin's Real Estate A to Z] HUG vs SGI Jeonse Deposit Guarantee Insurance, What Are the Differences?

[Asia Economy Reporter Ryu Tae-min] Recently, the number of tenants who fail to receive their jeonse deposit refunds from landlords on time has surged. This is due to the widespread occurrence of "empty-can jeonse" as housing prices have dropped by hundreds of millions of won since the beginning of the year. Last month, the amount of jeonse deposits not refunded exceeded 100 billion won for the first time ever, increasing tenants' interest in jeonse deposit guarantee insurance. However, experts advise that since each insurance has different detailed subscription requirements, tenants should carefully review these before signing up.

According to the Housing and Urban Guarantee Corporation (HUG) on the 16th, the amount of claims for jeonse deposit return guarantee insurance last month was 108.9 billion won, with 511 cases reported. This is the first time both the claim amount and the number of cases exceeded 100 billion won and 500 cases, respectively. It was the highest monthly record ever. The total amount recorded up to August this year reached 536.8 billion won, and if this trend continues, it is expected to surpass last year's claim amount.

Jeonse deposit guarantee insurance can be subscribed through HUG and Seoul Guarantee Insurance (SGI). They are called "Jeonse Deposit Return Guarantee Insurance" and "Jeonse Deposit Credit Guarantee Insurance," respectively. Both products guarantee tenants' deposits by paying the deposit to tenants on behalf of landlords who fail to return it on time, and then claiming reimbursement from the landlords. However, they differ in the type of guarantee: "repayment guarantee" and "return guarantee."

HUG's Jeonse Deposit Return Guarantee covers detached houses, multi-family houses, row houses, multi-unit houses, residential officetels, and apartments. For residential officetels, the real estate agent must indicate the primary use as residential on the jeonse contract, and separate registration is mandatory. Neighborhood living facilities, detached (multi-household) buildings, and communal living homes are not covered. The guarantee amount is up to 700 million won in the metropolitan area and up to 500 million won in other regions.

SGI's Jeonse Deposit Credit Guarantee Insurance covers apartments, multi-unit (row) houses, detached houses, multi-family houses, residential officetels, and urban lifestyle housing. For apartments, there is no limit on the guarantee amount, and for general houses, deposits up to 1 billion won are fully guaranteed.

There are also differences in the subscription period. For HUG, to apply for guarantee subscription, more than half of the jeonse contract period must remain, and the contract period must be at least one year. SGI requires that at least one year remains on the jeonse contract period, and subscription is possible within 10 months from the start date of the lease contract.