Improvement of Public Rental Housing Deposit Conversion Guarantee System... "Easier Jeonse Loans"

Kwonikwi Recommends LH to Revise Internal Regulations

Tenants of public rental housing are expected to be able to pay a higher rental deposit using the conversion deposit from the initial lease contract and lower their monthly rent.

Kim Tae-gyu, Vice Chairman of the Anti-Corruption and Civil Rights Commission. [Photo by Yonhap News]

On the 29th, the Anti-Corruption and Civil Rights Commission announced that it recommended the Korea Land and Housing Corporation (LH) improve the system so that tenants of public rental housing can prepare lease contracts reflecting the increased deposit amount from the initial lease contract and more easily obtain jeonse deposit loans.

Mr. A was selected as a tenant of public rental housing located in Gangnam-gu, Seoul, and signed an initial lease contract with LH with a rental deposit of 60 million won and a monthly rent of 700,000 won. Mr. A applied for a jeonse loan of 160 million won from a bank to pay an additional 100 million won in rental deposit using the conversion deposit system and reduce the monthly rent to 300,000 won. However, the bank only approved a loan up to the deposit amount of 60 million won stated in the lease contract. Mr. A requested LH to amend the lease contract for the jeonse loan, but LH refused.

According to the Anti-Corruption and Civil Rights Commission’s investigation, LH’s current operation method of the conversion deposit system does not allow the preparation of amended contracts before the payment of the rental deposit, resulting in an unreasonable situation where tenants cannot receive policy funds such as the Butimok Jeonse Loan. Kim Tae-gyu, Vice Chairman of the Commission, said, “By improving the operation method of the conversion deposit system, we can contribute to the housing stability of tenants who want to utilize policy funds such as jeonse loans,” and added, “We will continue to promote various system improvements for the housing stability of public rental housing tenants.”