"Targeting Young Adults Starting Their Careers"... 7 out of 10 Jeonse Fraud Victims Are in Their 20s and 30s

All 47 Fraud Victims in Guro and Gwanak Are in Their 20s and 30s
Low Real Estate Transaction Experience, High Demand for Villas and Multi-family Housing
Easy Targets for Jeonse Fraud... "System Improvement Needed"

[Asia Economy Reporter Hwang Seoyul] #Kim (26), a young professional, has been having trouble sleeping frequently since signing a jeonse lease contract a few days ago. This is because news about tenants being scammed by so-called ‘villa kings’ and not getting their jeonse deposits back has been pouring in daily. Kim said, "I made efforts to prevent jeonse fraud, such as verifying the landlord’s tax payment records, but I am still anxious about whether I will get my deposit back in two years."

[Image source=Yonhap News]

As jeonse fraud cases increasingly target the 20s and 30s age group with little real estate transaction experience, more tenants in their 20s and 30s like Kim are facing similar concerns. There is a growing call for institutional support from the government in addition to individuals’ careful checks to prevent damage.

According to the police on the 11th, most recent victims of jeonse fraud in the Gwanak-gu area of Seoul were also in their 20s and 30s. Real estate lessor A was recently arrested on charges of buying dozens of villas and officetels in Guro and Gwanak-gu under other people’s names from January 2017 to July 2021, renting them out, and failing to return a total of about 3.8 billion KRW in jeonse deposits to tenants. So far, 47 victims have been identified, all of whom were in their 20s or 30s at the time of contract.

This is not the only case where the 20s and 30s age group has been targeted by jeonse fraud. In the Hwagok-dong area of Gangseo-gu, Seoul, a ‘Hwagok-dong gap investment empty jeonse fraud case’ involved purchasing 283 villas over two years and embezzling about 3.1 billion KRW in rental deposits from 18 people. Most victims were young professionals or newlyweds in their 20s and 30s. The perpetrator, Kang, colluded with real estate agents and others to receive rental deposits higher than the actual sale price without using his own capital, paid the villa purchase price to the building owners, and received the difference back as a ‘rebate.’

The 20s and 30s age group is analyzed to be the main target of jeonse fraud because they lack real estate transaction experience and have lower economic power, often choosing multi-family houses, row houses, or officetels rather than apartments as residences. According to the age distribution of jeonse fraud victims revealed at the Ministry of Land, Infrastructure and Transport’s ‘2nd briefing session for jeonse deposit fraud victims’ held the day before, 17.9% were in their 20s and 50.9% in their 30s. About 7 out of 10 victims belong to the 20s and 30s age group.

Professor Lim Jaeman of Sejong University’s Department of Real Estate said, "Young people also prefer relatively safe apartment living, but due to lack of capital, they tend to choose newly built villas that fit their budget. Even though the market price of new villas is unclear, young people think it is safe if jeonse loans are available and jeonse deposit return insurance is subscribed."

Experts say that while strengthening the responsibility of real estate agencies, tenants also need to carefully check information about the leased building beyond the contract. Professor Baek Seongjun of Hansung University’s Department of Real Estate emphasized, "Many victims suffer losses without experience in real estate contracts such as registration or priority order. It is necessary to mandate real estate agencies to fully explain the risks during the contract process."

Attorney Kim Yerim of Deoksu Law Firm said, "In multi-family houses, since registration was not done per household, tenants could not know who else was residing, but the law is being amended to allow checking the resident registration list. It is essential to check this to confirm the priority deposits and the total market price of the multi-family house." She added, "For multi-family houses, villas, and one-room units, it is recommended to verify that the registry matches the owner."