Gwangju Chamber of Commerce and Industry: "HUG Lease Deposit Guarantee System Increases Burden on Construction Lease Operators"

Proposal for System Improvements Submitted to the Office for Government Policy Coordination and the Ministry of Land, Infrastructure and Transport

Exterior view of Gwangju Chamber of Commerce and Industry.

The Gwangju Chamber of Commerce and Industry has submitted a proposal to the authorities, stating that the revised lease deposit guarantee system of the Housing and Urban Guarantee Corporation (HUG), which is being applied equally to construction lease operators, is causing excessive financial burdens and liquidity crises. The chamber is urging for improvements to the system.

On the 22nd, the Gwangju Chamber of Commerce and Industry announced in a statement, "Since June of last year, the appraisal method of the revised HUG lease deposit guarantee system, which was originally intended to prevent jeonse fraud, has been applied equally to construction lease operators, who have an extremely low guarantee accident rate. This is causing excessive financial burdens and liquidity crises in the field." The chamber added, "We have delivered a proposal to the Office for Government Policy Coordination, the Ministry of Land, Infrastructure and Transport, and the Housing and Urban Guarantee Corporation, urging improvements to the system."

Under the revised system, only a small number of appraisal companies designated by HUG determine the guarantee standard amount, which has repeatedly failed to adequately reflect the market conditions and actual prices in non-metropolitan areas. As a result, construction lease operators who have already legally signed lease contracts are now being required to pay large amounts of cash or provide additional collateral in order to maintain their guarantees.

The Gwangju Chamber of Commerce and Industry emphasized that, although the main cause of jeonse fraud lies with individual lease operators, applying the same standards to construction lease operators-who have an extremely low guarantee accident rate-requires reconsideration in terms of policy fairness and effectiveness. In fact, according to HUG data, the guarantee accident rate for individual lease operators over the past two years has been in the 7-9% range, while for construction lease operators, it has remained below 1%.

The chamber also pointed out, "A decrease in appraisal amounts not only affects lease operators but also creates blind spots in guarantees for tenants, increasing anxiety about the recovery of their deposits. In the long term, the accumulated deterioration in the management of construction lease operators could actually lead to a new risk of increased guarantee accidents."

The Gwangju Chamber of Commerce and Industry is calling for practical improvements to the system, taking into account both the structure of jeonse fraud and the actual guarantee accident rates. The chamber's recommendations include: excluding construction lease operators from the current lease deposit guarantee system, and at a minimum, exempting existing complexes that received guarantee certificates before the system was revised in June last year from retroactive application.

Han Sangwon, Chairman of the Gwangju Chamber of Commerce and Industry, stated, "This proposal is not an issue limited to a specific region but a serious matter that is spreading nationwide. We hope the government and relevant agencies will quickly come up with reasonable improvement measures that reflect the voices from the field."