SH, Jeonse Lease 'Hot Potato' Damage Cases '0'

[Asia Economy Reporter Ryu Tae-min] Seoul Housing and Communities Corporation (SH) announced on the 31st that, following an internal investigation into cases of jeonse fraud exploiting public housing support policies recently reported in the media, no cases of damage were found within SH.

SH checked for related damage cases in response to media reports that so-called “passing the bomb” scams, which exploit the Korea Land and Housing Corporation (LH)’s jeonse rental system to lure other tenants, are rampant. However, SH stated that no damage cases have been identified so far.

SH analyzed that this is because its jeonse rental housing strictly adheres to conditions such as ▲only housing with a debt ratio below 90% can be contracted ▲mandatory subscription to guarantee insurance ▲thorough review of rights relations and prohibition of contracts in case of abnormalities ▲monitoring of suspicious transactions ▲prohibition of contracts with landlords who have a history of jeonse accidents.

Specifically, SH requires mandatory subscription to jeonse rental housing credit insurance held by SGI Seoul Guarantee Insurance for the full deposit amount (including resident’s burden) when concluding a jeonse rental housing lease contract. Additionally, during housing screening, SH reviews the amount of claims such as mortgages and priority tenant deposits. Contracts for houses under auction or public sale, unauthorized or unregistered houses, and buildings violating construction regulations are also completely prohibited.

Furthermore, SH has developed a system to continuously monitor landlords and brokers involved in “abnormal transactions” where transactions have surged within a certain period, thereby fundamentally blocking the occurrence of jeonse fraud. In particular, to completely prohibit jeonse rental contracts with landlords who have a history of jeonse accidents, SH recently amended the “Jeonse Rental Housing Credit Insurance Agreement” with SGI Seoul Guarantee Insurance and revised its standard jeonse rental lease contract form.

Moreover, SH explained that the “Long-term Safe Housing,” a tenant-type rental housing supplied with support from the Seoul Metropolitan Government, also fundamentally prevents jeonse fraud by concluding lease contracts after subscribing to jeonse guarantee insurance through SGI Seoul Guarantee Insurance and conducting rights analysis and review through a law firm.

SH further stated that it plans to actively propose institutional improvements to eradicate fraud exploiting the jeonse rental system. It intends to request amendments to related laws and institutional improvements from the Ministry of Land, Infrastructure and Transport and others to severely punish malicious landlords and real estate agents involved in unfair transactions. SH added that it will closely cooperate with related organizations involved in the “Jeonse Rental Business” to identify institutional shortcomings and propose measures such as developing a shared system for malicious landlords to fundamentally block fraud damage exploiting the jeonse rental system.