Won Hee-ryong "Jeonse Fraud Damage Since 2019... Moon Administration Caused It"

Jeonse Fraud Victims to Persist Until Next Year
Eradication of No-Capital Gap Investment
Launch of Safe Jeonse App

[Asia Economy Reporter Kim Min-young] Won Hee-ryong, Minister of Land, Infrastructure and Transport, recently criticized that part of the cause of the recent surge in Jeonse fraud lies in the real estate policies of the Moon Jae-in administration.

Minister Won said at a briefing on comprehensive measures against Jeonse fraud held at the Government Seoul Office on the morning of the 2nd, "Jeonse fraud is a big problem these days. People may ask when the cause accumulated and why Jeonse fraud suddenly occurred, but it was during the previous administration."

He continued, "While finance was being released without limits, Jeonse loan financing was provided as 'people's finance' without any filtering or soundness control," adding, "Ideologically, it was a rental law and Jeonse loan for the people, but the result was that it threw bait to organized fraud groups, and many ordinary people became victims of Jeonse fraud."

On the 2nd, Won Hee-ryong, Minister of Land, Infrastructure and Transport, is answering questions from the press at the demonstration of the 'Safe Jeonse App,' which contains information on new villa market prices and risky listings, held at the Government Seoul Office in Jongno-gu, Seoul. Photo by Kim Hyun-min kimhyun81@

Minister Won mentioned that the volume of Jeonse fraud damage was concentrated from 2019 to early last year, explaining, "The damaged properties from Jeonse fraud have been surfacing since the second half of last year." He also predicted that Jeonse fraud damage would continue to occur until next year. He said, "We expect this year to peak, and probably Jeonse contracts signed until 2021 will come out until next year."

Minister Won said, "Due to the five-year surge in housing prices, young people and newlyweds have moved mainly to newly built villas," adding, "Although the cause was provided by the previous administration and it snowballed, the Yoon Seok-yeol administration will do its best to protect the livelihood of ordinary people and normalize the Jeonse rental market by preparing measures and solving the problem through action."

The government announced the 'Jeonse Fraud Prevention and Damage Support Plan' jointly with related ministries including the Ministry of Economy and Finance, the Ministry of Land, Infrastructure and Transport, and the Ministry of Justice. To prevent gap speculation without capital, the return guarantee Jeonse rate was lowered from 100% to 90%, and in cases where Jeonse houses are inevitably auctioned due to Jeonse fraud, the no-homeowner condition will be maintained. In addition, a refinancing loan product with an interest rate of 1-2% will be newly established for Jeonse fraud victims, and 500 emergency shelters will be secured.

Minister Won especially emphasized eradicating gap speculation without capital. He elaborated, "By making it impossible to trade unless at least 10% of one's own capital is invested, we will eliminate organized gap speculation and contracts that include rebates or profit sharing on Jeonse deposits higher than the sale price based on value standards."

He also stated that the system will be strengthened so that rental business registration can only be done if a guarantee is subscribed. Minister Won said, "For landlords who fail to fulfill the obligation to subscribe to the guarantee afterward, we will make it mandatory to include special clauses allowing tenants to unilaterally terminate the contract and receive penalties."

The government also unveiled the Safe Jeonse app developed to preemptively block tenants' Jeonse damage. Minister Won explained, "We will provide key information that must be checked at a glance, such as accurate market price information, guarantee subscription availability, and whether the landlord is malicious, so that tenants can contract with peace of mind."

He added, "Even after the Jeonse contract, to ensure the safety of the deposit, we will reflect special clauses in the standard brokerage contract such as prohibiting landlords from setting senior mortgages and notifying tenants upon sale contracts," and said, "We will strengthen brokers' obligations so that they play a key role in preventing Jeonse fraud and additionally disclose brokers' business histories so tenants can avoid risky brokers."

Minister Won stated, "We will immediately start possible government-level measures such as preventing abuse of the guarantee system and expanding the functions of the Safe Jeonse app to ensure the prompt implementation of the measures announced today, and actively cooperate with the National Assembly to swiftly amend the six major laws to prevent Jeonse fraud, including the disclosure of bad landlords' lists."