Seoul City Makes All-Out Efforts to Support and Prevent 'Kkangtong Jeonse' Fraud Victims

A rental notice for Jeonwolse (monthly and yearly rent) posted at a real estate agency in downtown Seoul (Photo by Yonhap News)

[Asia Economy Reporter Ryu Tae-min] The Seoul Metropolitan Government announced that it will make every effort to support and prevent victims of "Kkangtong Jeonse" (empty-can Jeonse) fraud. This comes as the number of victims unable to recover their Jeonse deposits after lease contracts end has been increasing, particularly in Seoul and the metropolitan area.

On the 5th, Seoul City revealed that it will implement the "Kkangtong Jeonse Victim Support and Prevention Measures" starting this month. This policy aims to assist vulnerable residents who have been defrauded or failed to receive their Jeonse deposits on time. Recently, Jeonse fraud cases have been rising, especially involving so-called "Kkangtong Jeonse," where the Jeonse price exceeds the housing sale price, resulting in tenants being unable to recover their deposits or being exploited due to insufficient contract information.

The new measures focus on helping victims suffering from malicious Jeonse fraud within the Kkangtong Jeonse cases. The plan consists of three main directions: ▲financial and legal support ▲proactive response to malicious landlords ▲prevention of potential Kkangtong Jeonse damages.

Since August last year, Seoul has introduced various measures to address Kkangtong Jeonse and Jeonse fraud damages, including ▲disclosure of Jeonse price ratios and monthly rent information ▲consultations on precautions and confirmations when signing Jeonse contracts ▲operation of the Jeonse Price Counseling Center ▲intensive investigations into illegal brokerage activities. This time, additional measures have been added to directly assist citizens who have suffered fraud and to prevent further damages.

First, for households currently receiving the "Newlywed and Youth Tenant Deposit Interest Support" operated by Seoul City, those who are unable to repay loans on time due to Kkangtong Jeonse or Jeonse fraud will have their loan repayment and interest support extended for up to four years. For households preparing for legal action, the city will provide interest-free support.

Considering that Jeonse fraud victims are concentrated among newlywed couples and youths in their 20s and 30s, the city will exceptionally provide support regardless of eligibility when lease or loan periods expire. Eligible recipients include those who have applied for tenant registration orders due to unrecovered deposits, resulting in tenant rights being registered on the housing registry, or those involved in lawsuits for Jeonse deposit returns or auction procedures on the leased property.

Furthermore, if lawsuits against landlords have been initiated or the leased property has entered court auction due to unrecovered deposits, the city plans to improve the system so that it covers all loan interest incurred for up to four years, relieving the victims of interest burdens.

To prevent deposit losses for young workers, this year, new applicants for the "Newlywed and Youth Tenant Deposit Interest Support" will receive full coverage for the Jeonse deposit return guarantee subscription and guarantee fees. The "Jeonse Deposit Return Guarantee" is a system where the Korea Housing Finance Corporation pays the tenant deposit on behalf of the landlord if the landlord fails to return it after the contract ends. Seoul City plans to promptly coordinate with affiliated institutions such as the Housing Finance Corporation, banks, and the Ministry of Health and Welfare regarding social security system changes.

A "one-stop consultation desk" will also be established for citizens overwhelmed by Jeonse fraud damages. The city plans to expand and reorganize the "Seoul Jeonse and Monthly Rent Comprehensive Support Center" next month, integrating functions such as dispute mediation, loans, lease, and price counseling.

The "Seoul Jeonse and Monthly Rent Comprehensive Support Center" will comprehensively provide financial support, housing lease, Jeonse price counseling, operation of dispute mediation committees, regional Jeonse price ratio information, and specialized legal support services related to Jeonse fraud, which were previously offered separately by the Jeonse Deposit Support Center and Jeonse Price Counseling Center.

Additionally, considering that the government’s emergency loan for Jeonse fraud victims (1% interest rate) with a maximum limit of 160 million KRW is significantly low compared to the average Jeonse price in Seoul (470 million KRW), the city will propose amendments to related enforcement decrees to enable additional support beyond government loans. Once the "Regional Credit Guarantee Foundation Act Enforcement Decree" is revised and legal grounds are established, the city plans to develop low-interest loan products to support tenants in crisis.

To proactively respond before malicious landlords?the main perpetrators of Jeonse fraud?emerge, the city will monitor "suspected Jeonse fraud properties" and promote inter-agency cooperation for damage prevention. In the first half of this year, a joint inspection and crackdown on illegal brokerage activities involved in Jeonse fraud will be intensively conducted by Seoul’s Land Management Division, Civil Affairs Judicial Police Unit, and autonomous districts.

By comprehensively analyzing building owner information, housing sales, and Jeonse and monthly rent transaction data, the city will preemptively identify suspicious malicious landlords. If strong suspicions of Jeonse fraud arise through monitoring, information will be shared with the National Police Agency, and cooperation in investigations will be provided.

In particular, to establish a fair price assessment system for newly built villas where Kkangtong Jeonse issues frequently occur, the city will propose revising the Building Act to require reporting of the "planned sale price" upon use approval for multi-family housing with fewer than 29 households, allowing tenants to confirm the expected sale price before signing contracts.

To enable tenants to check the possibility of Kkangtong Jeonse before signing contracts, the "Jeonse Price Ratio" information by district and housing type, previously disclosed on the "Seoul Housing Portal" website, will be made available from January through private real estate portal apps such as Dabang, R114, and Real Estate Planet.

Moreover, Jeonse price ratio materials will be stocked at licensed real estate offices throughout Seoul, and the city plans to collaborate with universities to operate special lectures on real estate contracts for freshmen and young workers.

Yoo Chang-soo, Director of the Housing Policy Office, stated, "We are preparing and immediately implementing measures to help young people in their 20s and 30s who are suffering because they cannot recover Jeonse deposits that are close to their entire assets. We will continue to seek practical ways to assist Jeonse fraud victims and devote full efforts to preventing Jeonse fraud caused by Kkangtong Jeonse."