Won Hee-ryong: "DSR Relaxation for Jeonse Deposit Return Should Require Return Guarantee for Next Tenant"

On the 13th, Won Hee-ryong, Minister of Land, Infrastructure and Transport, stated regarding the relaxation of the total debt service ratio (DSR) regulation for loans aimed at returning jeonse deposits, "It must be used solely for the purpose of returning the deposit to the tenant, and then the tenant and the incoming tenant must have full deposit return guarantees."

On the same day, during the National Assembly's economic sector questioning, when Yoodongsoo, a member of the Democratic Party of Korea, mentioned that "the DSR regulation relaxation is quite risky," Minister Won responded, "I agree," and made the above remarks.

Regarding the DSR relaxation, Minister Won said, "Even if we consider it, existing single-homeowners already have the special housing loan system for their homes. Since it was established last year, most of it is already utilized," adding, "If there is a risk that good landlords cannot temporarily return the jeonse deposit, causing harm to tenants, we can temporarily increase the loan limit."

[Image source=Yonhap News]

He continued, "The principles of return guarantees, collateral value, and the borrower's repayment ability still apply, so contrary to what is being discussed in the market, we are not approaching this as the government releasing funds to cover the falling jeonse deposits."

Regarding his recent statement that "the jeonse system has reached its end," Minister Won explained, "Jeonse has played a positive role over time. I believe there is still social demand," and added, "The government is not unilaterally telling people to abolish or stop it." He further stated, "It is time for us to analyze the side effects and problems and address those issues; this would be a matter of supplementation."

On recent real estate market trends, he said, "It is not appropriate for the government to manipulate housing prices directly. I believe it is wrong to suppress them with artificial tools," and added, "If demand and supply are a price discovery process seeking equilibrium prices, I think it is necessary to observe and approach this from a broader perspective."