Minister Park Sang-woo: "Lack of Public Consensus on 'Pre-Notification Post-Collection'... Need to Move Towards Long-Term Private Rental"

"Support for Jeonse Fraud Victims Should Prioritize Current Laws"
Proposal for Long-Term Private Rental Housing... Announcement of 'Supply Measures' and More

The government announced that it will prioritize housing stability for victims of Jeonse fraud and work to develop practical support measures. Regarding the ruling party's proposed 'rescue first, recover later' approach, the government emphasized that there is insufficient public consensus and that it is not too late to discuss funding and the scope of support after the auction of the affected properties is completed. Furthermore, the government stated that next week it will introduce measures to revitalize housing supply, including Jeonse, and next month it will present a long-term private rental housing model that breaks the existing Jeonse framework.

Minister of Land, Infrastructure and Transport Park Sang-woo is having a casual meeting with attending reporters at the Government Sejong Complex on the 13th. / Photo by Ministry of Land, Infrastructure and Transport

On the 13th, Park Sang-woo, Minister of Land, Infrastructure and Transport, met with reporters at the Government Complex Sejong and said, "As the minister in charge, I judged that I could not remain silent," adding, "The opposition party plans to pass a special law amendment to support victims of Jeonse fraud on the 28th, but it is better to first pursue methods feasible under current law."

The amendment centers on public institutions such as the Housing and Urban Guarantee Corporation (HUG) purchasing the deposit return claims first to refund part of the deposit, then claiming compensation from landlords or recovering funds by selling (through auction or public sale) the Jeonse fraud victim properties. It was directly submitted to the National Assembly plenary session led by the opposition on the 2nd of this month and is scheduled to be discussed on the 28th. Since the enactment of the special law, victims of Jeonse fraud have demanded 'rescue first, recover later,' but the government has drawn a line, stating that there is no precedent for compensating losses arising from private contracts.

The ruling party and government are concerned that there are many legal ambiguities and that implementing the law immediately in one month without determining the budget, funding, and scope of support will only cause confusion. Minister Park said, "The opposition suggests using the Housing and Urban Fund, but the fund, which is based on subscription savings accounts of the homeless, cannot be used indiscriminately," pointing out, "It would mean covering losses amounting to trillions of won at the expense of other citizens."

He added, "Once the damage amount is confirmed through auction, we should decide on funding and compensation scope through social consensus," and "We will have the Korea Land and Housing Corporation (LH) actively participate in auctions to purchase the victim properties." LH is promoting the purchase of Jeonse fraud victim properties to supply them as rental housing.

As an alternative to the Jeonse system, he mentioned long-term private rental housing. Minister Park said, "The reason the Jeonse system could persist was because Jeonse prices continuously rose, but currently, Jeonse price increases and reverse Jeonse rates are about half each," adding, "Introducing escrow into the Jeonse system alone is insufficient." He emphasized, "We need to move toward a system where tenants pay a reasonable deposit and monthly rent according to their income level," and "Public rental housing involves significant government expenditure, which limits occupancy. We are working on transitioning to corporate-type private rental housing in the long term."

Regarding the two lease laws (right to request contract renewal and rent ceiling system), which will mark their fourth year of enforcement this year, he reiterated the position that they should be "restored to their original state (repealed)." Minister Park said, "The lack of new listings is a problem caused by the two lease laws, and we are considering easing measures. Based on a recent service result, we will present related content in the next Jeonse policy," adding, "There may be concerns about whether repeal is more reasonable, but once a technical agreement is reached between the ruling and opposition parties, we need to prepare a soft landing plan."

Regarding the recent housing supply statistics error, he said, "An unacceptable incident occurred. To prevent recurrence, we started an internal audit last week with a one-month target," and added, "We will pay close attention to every single number."