Lease damage victims can get loans up to 240 million KRW per household at 1-2% interest... Considered homeless upon winning the bid

Deposit Requirement for Jeori Loan Guarantee
Relaxed from 200 million to 300 million KRW

[Asia Economy Reporter Minyoung Kim] The recent measures to prevent jeonse fraud and support victims focus on housing stability and alleviating livelihood burdens. In particular, the eligibility requirements for low-interest loan products, which had been criticized for their ineffectiveness, will be relaxed, and a refinancing loan product allowing victims to switch to low-interest loans will be newly introduced. This is expected to reduce the interest cost burden on affected tenants and improve the quality of loans.

Deputy Prime Minister and Minister of Economy and Finance Choo Kyung-ho is holding a joint briefing on measures against jeonse fraud on the 2nd at the Government Seoul Office in Jongno-gu, Seoul, attended by Minister of Land, Infrastructure and Transport Won Hee-ryong, Minister of Justice Han Dong-hoon, and Commissioner of the National Police Agency Yoon Hee-geun. Photo by Kim Hyun-min kimhyun81@

First, starting in March, the deposit requirement for low-interest loans will be relaxed from the existing 200 million KRW to 300 million KRW, and the loan limit will be expanded from 160 million KRW to 240 million KRW. A refinancing loan product for affected tenants will also be introduced by May. The government’s “Low-Interest Emergency Fund Loan” announced in January had been criticized for its ineffectiveness. This product, utilizing the Housing and Urban Fund, allows loans from Woori Bank at an annual interest rate of 1.2% to 2.1%, for up to 10 years, with a limit of 160 million KRW (within 80% of the deposit). However, the loan is only executed when victims without guarantee insurance find a new home with a deposit of 200 million KRW or less. Affected tenants have pointed out that the loan purpose was fixed as “new jeonse loan” and have demanded improvements to allow refinancing loans. After having their deposits taken and paying interest on existing loans, how many people would choose to take out new loans and increase their debt?

Accordingly, despite jeonse fraud, the government plans to introduce a product that allows tenants who must continue living in their existing jeonse homes to refinance their existing jeonse loans into low-interest loans with interest rates in the 1-2% range, thereby reducing their livelihood burdens.

To alleviate tenants’ housing insecurity, the supply of emergency housing will also be expanded. According to the Ministry of Land, Infrastructure and Transport, as of January, 28 forcibly managed houses by the Housing and Urban Guarantee Corporation (HUG) and 200 emergency support houses by the Korea Land and Housing Corporation (LH) have been secured. However, there are thousands of affected tenants who have entered auction procedures due to jeonse fraud and face eviction. Reflecting this situation, the government plans to secure more than 500 public rental units in the metropolitan area by the first half of the year and improve user convenience through rapid move-in and on-demand maintenance.

Researcher Eunhyung Lee of the Korea Construction Policy Institute said, “Since tenants can be reasonably considered to have actual residence needs, it is important to institutionally support their housing and damage recovery.”

Currently, when victims of jeonse fraud inevitably win the bid for their residence, the period of being homeless is not recognized, lowering their chances of winning future housing lotteries. There have been opinions that victims’ circumstances should be considered. Accordingly, starting in May, if affected tenants win the bid for a house with a publicly announced price of 300 million KRW or less (150 million KRW or less in provincial areas) and an exclusive area of 85㎡ or less, they will be regarded as homeless.

Additionally, a revision bill to the Housing Lease Protection Act will be submitted to the National Assembly this month to allow tenants to register their lease rights before the landlord receives the registration order. Furthermore, in cooperation with the Korea Legal Aid Corporation and the Bar Association, the government plans to expand legal counseling services and is considering providing personnel support from HUG to strengthen the role of the Jeonse Fraud Support Center.