Visit to Real Estate Agency Office in Gangseo-gu, Seoul
Discussion of Measures with Kim Tae-woo, Head of Gangseo-gu Office, and Others
[Asia Economy Reporter Kim Min-young] The government is pushing for a zero-tolerance policy such as ‘license revocation’ (one-strike-out) against real estate agents suspected of Jeonse fraud.
On the 29th, Won Hee-ryong, Minister of Land, Infrastructure and Transport, visited a real estate agency office in Hwagok-dong, Gangseo-gu, Seoul, where Jeonse fraud damage has recently concentrated, and said, "We will conduct a full investigation of agents suspected of involvement in Jeonse fraud, identify malicious agents without fail, and punish them severely according to the zero-tolerance principle, including license revocation upon detection."
He added, "I have received shocking news that agencies that brokered Jeonse fraud houses are still attracting low-income tenants through illegal brokerage activities such as charging Jeonse prices higher than market value and real estate consulting by brokerage assistants," and emphasized, "The industry should also make efforts to self-cleanse so that distrust does not spread throughout the licensed real estate agent industry."
He particularly pointed out the problem of ‘up contracts,’ where transactions are made at prices higher than the actual market price. Jeonse fraud groups exploit the difficulty in assessing the market price of villas to inflate Jeonse deposits above market value and pocket the difference as a fraudulent scheme.
He also noted that issues such as brokerage assistants conducting ‘unqualified brokerage’ without proper qualifications and engaging in fraudulent activities need to be improved.
Minister Won said, "Up contracts and inflated appraisals themselves are fake," and added, "There are many cases where brokerage assistants set up crime dens under the guise of consulting and lure victims. This must be eradicated."
Minister Won ordered local governments to strengthen management and supervision, including ensuring compliance with the obligation to subscribe to rental business guarantee insurance. During a meeting with Kim Tae-woo, head of Gangseo District Office, he said, "Although rental business operators promote the obligation to subscribe to guarantee insurance to attract tenants, many cases have been detected where they are not actually subscribed and are exploited for Jeonse fraud," and requested, "Since rental business operators receive tax benefits, local governments should thoroughly manage whether they fulfill their public duties and take firm administrative actions."
The Ministry of Land, Infrastructure and Transport plans to announce a comprehensive countermeasure against Jeonse fraud as early as the beginning of next month. The comprehensive plan is expected to include measures to crack down on Jeonse fraud, support measures, legislative and judicial actions, and improvements to institutional vulnerabilities throughout the entire rental contract process.
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