Government to Accelerate Jeonse Deposit Returns... Introduction of Pre-Review System

[Asia Economy Reporter Kwak Min-jae] The Ministry of Land, Infrastructure and Transport and the Housing and Urban Guarantee Corporation (HUG) held the second briefing session for tenants affected by jeonse deposit fraud on the afternoon of the 10th at the Federation of Korean Industries building in Yeongdeungpo-gu, Seoul.

Lee Won-jae, the 1st Vice Minister of the Ministry of Land, Infrastructure and Transport, attended the second briefing session for tenants affected by jeonse fraud held at the Federation of Korean Industries conference room at 2 p.m. on the 10th. He explained the government's support measures for the victims and listened to the tenants' opinions.
[Photo by Ministry of Land, Infrastructure and Transport]

This briefing was the second following the first session held on the 22nd of last month, presided over by Minister Won Hee-ryong. Unlike the first session, which was limited to tenants with guarantee subscriptions, anyone affected by the fraud could apply to attend. The session was organized to explain support measures for victims of jeonse fraud, necessary actions by tenant type and stage, and the legal aid system provided by the Korea Legal Aid Corporation.

First, the government will introduce a ‘preliminary review system’ starting from the 11th of this month to expedite the return of jeonse deposits to victims of fraud. Previously, the guarantee claim and document review for deposit return could only be processed after registering the tenant’s rights. However, going forward, these procedures will be conducted prior to tenant rights registration. This improvement is expected to shorten the period for victims to recover their deposits by one to two months.

To ensure stable residence for victims, the government will also support the extension of jeonse loan maturities. Even when loans are guaranteed by HUG together with the Korea Housing Finance Corporation (HF) and Seoul Guarantee Insurance (SGI), measures will be taken to allow jeonse loans through guarantee period extensions. If banks refuse to extend loans, active measures will be pursued. Tenants can visit banks before the lease expiration date to receive individual reviews.

Financial support such as emergency low-interest loans will also be provided. Woori Bank offers loans with interest rates ranging from 1.2% to 2.1% per annum, for up to 10 years, with a maximum limit of 160 million KRW (within 80% of the deposit). Low-income households with an annual income of 30 million KRW or less (50 million KRW combined for couples) will receive interest-free funds up to 100 million KRW (within 80% of the deposit).

To protect consumers exposed to jeonse fraud due to insufficient market price information for new villas and other properties, the ‘Safe Jeonse App’ providing jeonse market price information and alerts on risky listings is planned to be launched in January. Starting in April, tenants will be able to access unpaid national tax information without the landlord’s consent after signing the jeonse contract. Additionally, institutional improvements will be pursued to allow tenants to be informed in advance about landlords’ national tax arrears.

Lee Won-jae, First Vice Minister of the Ministry of Land, Infrastructure and Transport, stated, “We will do our best to support victims of jeonse fraud and prevent recurrence,” adding, “We will strictly hold responsible parties such as landlords, builders, brokers, and real estate agents accountable, and after consultations with related agencies at the end of January, we will announce comprehensive measures to improve institutional vulnerabilities at the pre-lease contract stage.”