Administrative Notice on the Public Announcement of the 'Application Ratio of Official and Standard Market Prices'
Starting next month, the requirements for rental deposit return guarantee subscription, which rental housing business operators must mandatorily join, will be strengthened to the level of the jeonse deposit guarantee that tenants subscribe to.
A densely populated villa area in Yongsan-gu as seen from Namsan, Seoul. / Photo by Jinhyung Kang aymsdream@
Rental deposit guarantees can be subscribed to only when the jeonse price is 126% or less of the official property price, and the appraisal value recognized by the Housing and Urban Guarantee Corporation (HUG) will also be used as a basis for calculating house prices.
On the 9th, the Ministry of Land, Infrastructure and Transport announced an administrative notice of the draft "Official Property Price and Standard Market Price Application Ratio" containing these details. The ministry stated, "The official property price recognition ratio used as the standard for rental deposit guarantee subscription is differentiated by housing type and price, unlike the jeonse deposit return guarantee, making it difficult to properly calculate house prices. To calculate house prices more reasonably, the official property price recognition ratio will be unified to be the same as that of the jeonse deposit guarantee."
Accordingly, the official property price application ratio for rental deposit guarantees, which was previously applied differentially as 150% or less for multi-family housing under 900 million KRW and 190% or less for detached houses, will be unified to 140%. Only officetels will maintain the existing 120%.
For example, if a villa with an official property price of 200 million KRW subscribes to a rental deposit guarantee, up until now, the price was recognized up to 300 million KRW (150%). In addition, a debt ratio standard of 100% was applied. The debt ratio is the value obtained by dividing the rental deposit and the amount of mortgage registration by the house price. If there is no mortgage registration and the jeonse price is 300 million KRW or less, subscription to the rental deposit guarantee is possible.
From now on, a 140% official property price and a 90% debt ratio will be applied. For a villa with an official property price of 200 million KRW, the jeonse price must be 252 million KRW (126% of the official property price) or less to qualify for the rental deposit guarantee subscription. However, existing registered rental houses will have the system reform deferred until July 1, 2026. It is expected to be applied to new rental business operators starting next month.
If rental business operators believe that the official property price is too low and does not properly reflect the house price, they can file an objection with HUG. If HUG accepts the objection, the house price will be calculated by prioritizing the appraisal value rather than the 140% official property price application ratio or market price (KB Real Estate, Korea Real Estate Board Real Estate Tech). In this case, the appraisal value is calculated by an appraisal corporation directly commissioned by HUG.
According to the Private Rental Housing Act, rental business operators who have not subscribed to guarantee insurance must pay a fine of up to 10% of the deposit. Local governments impose fines of 5% of the deposit if the period without guarantee insurance is up to 3 months, 7% if up to 6 months, and 10% if exceeding 6 months. However, the total amount of fines does not exceed 30 million KRW.
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