Seoul to Provide Priority Security Deposit Refunds for Social Housing; Contracts Terminated for Poorly Managed Operators

Priority Payment of 344 Million Won to Seven Households
SH to Directly Manage Properties After Terminating Contracts with Poorly Run Operators

The Seoul Metropolitan Government will provide priority security deposit refunds to seven households among social housing tenants who have not yet received their deposits. For poorly managed properties, the city will terminate contracts and Seoul Housing & Communities Corporation (SH) will take over direct operation.

On August 26, the city announced that seven households in two social housing complexes located in Jangwi-dong and Seongsan-dong have not received a total of 344 million won in security deposits. The city will pay the full amount to these seven households in advance and plans to recover the losses later by exercising the right of recourse against the operators.

The city and SH identified the preferred timing for deposit refunds through consultations with affected tenants and plan to begin refunds as early as October. This is a proactive protection measure to ensure tenants receive their deposits regardless of the operator’s financial situation.

Previously, if an operator failed to return the deposit, tenants had to pursue legal action themselves. Now, the city and SH will take the initiative to protect tenants and later hold the operators accountable. This allows tenants to receive prompt relief without navigating complex legal procedures.

For properties where tenants have suffered damages such as unpaid deposits, contracts will be terminated immediately, and SH will purchase and directly manage the buildings. Direct management by a public institution will provide tenants with stable and sustainable housing services.

The social housing properties with unresolved refund issues operate under a land-lease model, where SH owns the land and the operator owns the building, supplied under a contract between SH and the operator. If an issue arises with the operator, SH can terminate the lease agreement and purchase the building.

Additionally, the city will impose strong sanctions against underperforming operators, including recovery of subsidies, cancellation of rental business registration, and legal action. Operators eligible for deposit insurance must enroll within two years as a condition of SH’s purchase commitment; failure to do so will result in contract termination.

Because land-lease social housing has different owners for the land and the building, it has been difficult to obtain deposit insurance since the system was introduced, leaving tenant protection vulnerable. SH plans to encourage operators to obtain deposit insurance by committing to purchase the building in case of a default and will provide a two-year grace period for compliance.

Going forward, the city will strengthen financial reviews of operators and monitor tenant satisfaction and the status of deposit management. Results of operator evaluations and financial soundness will be made public through the Seoul Social Housing Platform.

Choi Jinseok, Director of Housing at the Seoul Metropolitan Government, stated, "We will prioritize tenant protection and implement these measures quickly to prevent further damage and alleviate concerns," adding, "We will do our utmost to prevent similar issues from recurring in social housing in the future."