Seoul Steps In to Aid Youth Safety Housing Tenants Hit by Unreturned Deposits (Comprehensive)

4 Locations, 287 Households at Risk of Unreturned Deposits
City to Prioritize Deposit Payments for Senior Tenants
Utilizing City Budget and Housing Promotion Fund
Rental Business Registration to Be Revoked for Failure to Enroll in Deposit I

In response to a recent series of cases where security deposits for Youth Safety Housing have not been returned, the Seoul Metropolitan Government has announced that it will use the Housing Promotion Fund and city budget to prioritize the payment of deposits to senior tenants. For junior tenants, the city plans to have public housing operators purchase the affected homes with national funds and support the return of their deposits.

On August 20, the city revealed these measures in its announcement of protection policies for victims of Youth Safety Housing deposit issues. According to the city, out of a total of 137 Youth Safety Housing sites, 8 sites were found to be without deposit insurance. This affects a total of 1,231 households.

Jamsil Central Park in Songpa-gu Bird's-eye view Screenshot of the Youth Safety Housing website screen

Of these, four sites-including Naebalsan-dong, Dogok-dong, and Majang-dong-are expected to complete deposit insurance enrollment by September at the latest. The Seoul Metropolitan Government explained that these sites have established safety measures against lease fraud by managing tenants’ deposits in separate accounts, which can only be accessed with the consent of the lending consortium.

However, the remaining four sites, where 287 households currently reside, have been confirmed to be under provisional seizure or foreclosure. None of these sites have deposit insurance, so tenants are expected to suffer losses due to unreturned deposits.

Senior tenants to receive deposits from the fund... Junior tenants to be supported through public institution housing purchases

For victims who are senior tenants and wish to make an emergency move, the city will prioritize the payment of their deposits. After paying the deposit through financial institutions and law firms, the city will participate in the foreclosure auction to recover the equivalent amount. The Housing Promotion Fund will be used as the financial source for these payments.

A city official stated, "We plan to enact an ordinance in September and October to begin providing deposit support through the Housing Promotion Fund starting January next year." For victims who need their deposits returned sooner, support will be provided using the city budget. Currently, Seoul has approximately 15 billion KRW available in its budget for supporting victims of unreturned deposits.

For junior tenants, SH (Seoul Housing and Communities Corporation) and LH (Korea Land and Housing Corporation) will purchase the affected homes at auction to support victims. After acquiring the right of first refusal from the victims and winning the auction, the institutions will use the auction proceeds to pay out the deposits.

An emergency support system will also be activated for affected young people. This month, the Seoul Jeonse Damage Support Team will be dispatched to two sites where deposit return issues have arisen, holding consultation sessions on the claims process and document preparation. For young tenants struggling to move due to delayed deposit returns, the city will also provide information on loan connections and legal measures.

Tenant registration to be revoked for lack of deposit insurance... Proposal to amend the Special Act on Private Rental Housing

The city will also implement stricter measures to prevent unreturned deposits. If a site preparing to recruit tenants fails to enroll in deposit insurance by September, the city will revoke the landlord's registration. In addition to fines, the city will also reclaim benefits such as floor area ratio incentives and loan support previously granted during housing construction. This is intended to block unqualified operators from entering the market and strengthen responsibility to tenants.

Additionally, the city plans to propose an amendment to the current Special Act on Private Rental Housing to the Ministry of Land, Infrastructure and Transport. The current law does not include provisions for managing the financial soundness of operators, making it difficult to screen out unqualified landlords. The city will also verify financial soundness and the ability to enroll in deposit insurance during the operator selection stage to prevent unqualified operators from joining the Youth Safety Housing program. After tenants move in, the city will continue to monitor whether mandatory requirements are being fulfilled.

Previously, some Youth Safety Housing units supplied by the city and SH were subjected to compulsory auction and provisional seizure. In the case of Jamsil Central Park Youth Safety Housing, the developer was unable to pay the contractor for construction costs, resulting in a decision to commence a compulsory auction. Since this building is not covered by deposit insurance, 134 tenant households are at risk of losing deposits totaling 23.8 billion KRW. In Sadang-dong, Dongjak-gu, the Youth Safety Housing 'Cove' has also seen nearly a year-long delay in deposit insurance enrollment, and due to debt issues with the private operator, more than 50 households have been subjected to provisional seizure, increasing tenant concerns.

Choi Jinseok, Director of Housing at the Seoul Metropolitan Government, stated, "For young people, the housing deposit is often their only substantial asset and represents their entire wealth. We will do everything possible to minimize damages and provide swift support. We will continue to listen to voices from the field and develop new policies so that young people can plan and dream for their futures without worrying about housing."