HUG Repays 4 Trillion Won in Deposits on Behalf of Landlords... Recovery Rate Only 15%

The Housing and Urban Guarantee Corporation (HUG) has seen the outstanding balance of claims, which it has been unable to recover after refunding the jeonse deposits to tenants on behalf of landlords, exceed 4 trillion won.

View of a villa neighborhood from a building in Yangcheon-gu, Seoul. / Photo by Mun Ho-nam munonam@

According to data submitted by HUG to Maeng Seong-gyu, a member of the National Assembly's Land, Infrastructure and Transport Committee from the Democratic Party of Korea, the outstanding balance of HUG's claims from jeonse deposit return guarantee subrogation stood at 4.2503 trillion won as of the end of last year. The balance, which was 663.8 billion won at the end of 2021, increased to 1.37 trillion won by the end of 2022, marking a 6.4-fold increase in just two years.

The jeonse deposit return guarantee is a product where HUG first refunds the deposit to tenants who have not received their deposits back using its own funds, then recovers the amount over 2 to 3 years by claiming indemnity rights against landlords and through auctions.

94.3% of the outstanding claims are concentrated in the Seoul metropolitan area, including Seoul. Seoul has the largest amount at 1.5147 trillion won, followed by Gyeonggi Province at 1.3128 trillion won, and Incheon at 1.1843 trillion won.

In particular, in Seoul, Gangseo-gu, where the most jeonse frauds occurred, accounts for 523.7 billion won or 34.6% of the claims balance. This is followed by Yangcheon-gu (159.4 billion won), Guro-gu (155.5 billion won), and Geumcheon-gu (138.9 billion won).

In Gyeonggi Province, Bucheon-si (467.5 billion won) was found to have concentrated jeonse damages. In Incheon, the outstanding claims were large in Bupyeong-gu (331.9 billion won), Michuhol-gu (289.4 billion won), Seo-gu (232.2 billion won), and Namdong-gu (202.1 billion won).

The problem is that the recovery rate is gradually declining compared to the increasing outstanding claims. The annual recovery rate (recovered amount in the current year / subrogation amount) was 58% in 2019, then decreased to 50% in 2020, 42% in 2021, and 24% in 2022. As of July last year, it had dropped to 15%. The unrecovered funds become losses borne by HUG, worsening its financial soundness.

Assemblyman Maeng Seong-gyu said, "As the subrogation amount increases and auctions are delayed, the outstanding claims that HUG should receive are on the rise," adding, "Measures should be prepared to strengthen penalties against malicious landlords and enhance indemnity claims to secure HUG's financial soundness."