HUG President Choi Inho Visits Guarantee Incident Site: "Will Do Our Best to Protect Tenants"

Samil Paraview Guarantee Return Consultation Center Opens
Deposit Claims Allowed Immediately Upon Lease Termination
Samil Construction: "Appraisal System Needs Reform"

Choi Inho, President of the Housing and Urban Guarantee Corporation (HUG), visited a private rental housing site on March 3, where a rental deposit incident had occurred, to oversee on-site response efforts. As the regional construction company serving as the landlord entered court receivership, tenants' anxiety has increased. In response, HUG has decided to operate an on-site consultation center and initiate procedures to assist with the return of deposits.

Choi Inho, President of Housing and Urban Guarantee Corporation (HUG), is explaining the procedure for returning rental deposits at the Samil Paraview apartment complex in Asan City on the 3rd. Photo by HUG

According to HUG, President Choi personally attended a briefing session on rental deposit guarantee execution at the Samil Paraview Signature Apartment in Asan, South Chungcheong Province. Bok Giwang, a lawmaker from the Democratic Party of Korea representing the district, and Asan Mayor Oh Sehyun, were also present. Since taking office in late January, this was President Choi's first official external engagement.

President Choi stated, "Upon learning about this situation, we have prepared the best possible measures to fulfill HUG’s core mission of tenant protection," adding, "We will ensure that tenants can quickly receive their deposits back and return to their normal lives."

This apartment complex is operated as a private rental property by Paraview Golden Class, an affiliate of Samil Construction, a mid-sized construction company based in South Jeolla Province. Of the total 444 units, 440 are rented out. When Samil Construction filed for court receivership last month, tenants grew anxious. Some tenants, who had just renewed their leases, raised concerns when Samil Construction entered court receivership immediately afterward and are now demanding contract cancellations.

HUG believes the likelihood of deposits not being returned is low. All units are covered by guarantees, and a notice regarding the handling of the guarantee incident was sent out on February 26. Nevertheless, due to heightened anxiety among tenants, HUG has designated this complex as a guarantee incident site and will allow tenants to claim deposit returns as soon as their lease contracts end. Typically, a claim for guarantee execution can be made two months after contract termination, but this period has been shortened. This is the first time that HUG staff and lawyers are stationed on-site to provide consultations.

However, there are criticisms that HUG’s recognized appraisal system needs to be revised. Samil Construction’s immediate financial distress was not the cause; rather, the implementation of the recognized appraisal system led to a surge in collateral demands, prompting the company to file for court receivership. Since 2024, HUG has begun directly commissioning property appraisals to determine the value of guaranteed housing, which has resulted in valuation amounts below market prices. As a result, Samil Construction, which participated in joint guarantees, had to bear additional burdens.

Under current standards, the combined amount of deposits and fund loans must be set at 90% of the property's appraised value for guarantee coverage eligibility. If the appraised value is lowered, landlords must either reduce deposits or provide HUG with cash collateral for any amount exceeding the property value in order to obtain insurance. The Korea Housing Builders Association has expressed concerns that, due to this recognized appraisal system, 78,410 units across 160 construction rental sites operated by small and medium-sized construction companies could face a total of 3.83 trillion won in deposit payment defaults.

Choi Insul, CEO of Samil Construction, said, "The issue of collateral burdens caused by the recognized appraisal system is not limited to Samil Construction but is a problem faced by private construction rental operators nationwide." He added, "The interest burden on loans from the Housing and Urban Fund is also considerable, making it difficult for each site to generate much profit."

This content was produced with the assistance of AI translation services.