[Column] "Living in a Villa King's Rental House"... Rash Criticism Saying They Were Unaware and Got Hurt

Jeonse Fraud Is Not Only the Tenant's Fault
Complex Related Laws That Even Experts Find Difficult
Choices That Young People Cannot Refuse

Who bought the thousands of villas (multi-family and row houses) that were subject to court auctions due to jeonse fraud? It was assumed they were either real estate investors looking to buy homes below market price or actual residents.

The reality was completely different. Numerous unknown corporations swept up as many as 50 units each. They were 'speculators' targeting only villas with a winning bid rate (winning bid compared to appraised value) below 10%, as no one else wanted to buy them. The Housing and Urban Guarantee Corporation (HUG) contributed to the emergence of these 'new villa kings' by failing to recover funds from winning bidders who had supported the victims of jeonse fraud in a timely manner.

The corporations that secured dozens of villas naturally flooded the market with these properties through a 're-leasing' method. These villas are risky to move into. Since the jeonse fraud issues have not been resolved, new tenants may not be able to recover their rental deposits or could be evicted without any countermeasures. However, landlords and real estate agents concealed these risks and brought in tenants.

This raised questions. Is it the tenants' fault for not properly verifying that the villas had a history of jeonse fraud and that the winning bidders had not paid HUG? A tenant in their 30s whom I met in Bucheon, Gyeonggi Province, said that because the area had suffered heavy jeonse fraud damage, they carefully examined the documents multiple times. Out of fear of jeonse fraud, they deliberately chose monthly rent. They did not sign contracts out of ignorance of jeonse fraud.

Our country's lease system is too complicated. This is especially true for houses with a complicated history of jeonse fraud damage. Even experts consulted during the investigation said, "This is a very complex case," and could not provide immediate answers. The dozens of damaged houses I personally confirmed were all neat, newly built villas with no visible traces of jeonse fraud. Moreover, if the deposit and monthly rent were half the market price, it would have been an irresistible option for young people who are careful with every penny.

In this situation, HUG's attitude raises concerns. They seem unable to grasp the situation. On the 16th, HUG President Yoo Byung-tae appeared at the National Assembly audit and said he only learned about the mass winning bids and re-leasing behavior of corporations regarding jeonse fraud villas through newspaper reports.

On the same day, President Yoo said, "Those who are well-versed in the law know that houses with tenant registration (a system where tenants can apply to the court to recover their jeonse deposit from the landlord) can be subject to auction, which is risky, but the general public may not know this," and added, "We will strengthen publicity." If they knew it was so difficult that the general public would not understand, they should have taken action earlier. The villa kings actively exploited this 'government neglect' and the 'loopholes' in the complex system.

This year, more than 4,000 villas (as of the end of last month) have flooded the auction market. This is the highest quarterly level. The number of auction properties has increased significantly due to the aftermath of jeonse fraud. The embers of jeonse fraud, which were thought to have been extinguished, are still alive on one side. The seemingly extinguished embers of jeonse fraud are showing signs of reigniting, fueled by government neglect and HUG's negligence.