Tenants of Multi-Family and Multi-Unit Housing Can Easily Enroll in HUG Jeonse Deposit Return Guarantee

Multi-family and Multi-unit Housing Can Enroll Without Confirming Senior Priority Deposits
Additional Guarantee Fees Due to Increased Risk Will Be Covered by HUG

[Asia Economy Reporter Moon Jiwon] Tenants of multi-family and multi-unit houses, who have had difficulty subscribing to the Jeonse Deposit Return Guarantee provided by the Housing and Urban Guarantee Corporation (HUG), will soon be able to subscribe more easily. It is expected that the number of tenants worried about not getting their Jeonse deposit back from landlords will significantly decrease.

The Ministry of Land, Infrastructure and Transport announced on the 27th that it will improve HUG's Jeonse Deposit Return Guarantee system accordingly and implement the changes starting from the 7th of next month.

Previously, tenants of multi-family houses could only use HUG's Jeonse Deposit Return Guarantee if there was confirmation of deposits for other Jeonse contracts within the same house, making subscription practically difficult.

Since multi-family houses are classified as detached houses under the Housing Act and do not have separate registrations by household, HUG needed to verify senior priority deposits ahead of the tenant and assess accident and recovery rates.

However, going forward, tenants of multi-family houses will be able to subscribe to HUG guarantees at the existing premium rate (0.154%) without confirming other Jeonse contracts. HUG will support the increased premium portion caused by the higher guarantee risk due to the lack of other Jeonse contract confirmation to reduce the burden on tenants.

For example, if a tenant of a multi-family house with a Jeonse deposit of 70 million KRW subscribes to guarantee insurance for two years, the premium will be 43,120 KRW after applying an 80% discount (70 million KRW x 0.154% x 2 years x (1-0.8)). Since July 1st, HUG has been offering a 70-80% discount on premiums until December 31st to reduce tenants' burdens.

Originally, if other Jeonse contracts were not confirmed, HUG considered the tenant's accident risk high and charged a high premium rate of 0.427%, adding 76,440 KRW, but from now on, HUG will bear this cost instead.

Additionally, tenants of multi-unit houses, who previously could not subscribe to guarantee insurance, will now be eligible. Multi-unit houses refer to spaces where multiple people such as students or office workers can live long-term, including detached houses without independent residential units. Multi-unit houses can also subscribe without confirming other Jeonse contracts within the same house, and HUG will cover the premium increase due to the heightened guarantee risk.

The Ministry of Land also resolved the issue where tenants' guarantee subscriptions were restricted because it was difficult to measure risk when the landlord was a housing construction business operator or a corporate rental business operator.

Through this system improvement, HUG has also significantly reorganized the premium rate structure.

Instead of the previous premium rate system that only distinguished between apartments (0.128%) and non-apartments (0.154%), a customized premium rate system will be established by subdividing according to ▲housing type ▲guarantee amount ▲and the debt ratio of the tenant's house.

Tenants will only bear the appropriate premium for their rented house, and HUG will establish a stable guarantee risk management foundation.

When the risk of deposit accidents is low, a lower premium rate than the current one will be applied, and otherwise, the current premium rate will be maintained without increase, resulting in an overall reduction in premium levels.

Kim Younghan, Director of Housing Policy at the Ministry of Land, said, "The improvement of HUG's Jeonse Deposit Return Guarantee is expected to greatly help reduce many tenants' anxiety about deposits and premium burdens." Lee Jaegwang, President of HUG, emphasized, "We will continue to fulfill the social responsibility of a public institution actively supporting the government's housing welfare policies, as demonstrated by this system improvement."

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