[2020 National Audit] One Landlord Defrauded Tenants of 41.3 Billion Won in Jeonse Deposits... 202 Households Affected

HUG Covered the Payment but Could Not Recover a Single Penny
Due to Reckless 'Gap Investment'... Serious Waste of Taxes

Seoul Jamsil real estate agency scene. Photo by Mun Ho-nam munonam@

[Asia Economy Reporter Moon Jiwon] It has been revealed that a single landlord defrauded 20.2 billion KRW in jeonse deposits from 202 tenants. Although the public guarantee institution repaid the deposits on behalf of the landlord, it has not recovered a single won yet, according to investigations.

On the 7th, Kim Sang-hoon, a member of the National Assembly Land, Infrastructure and Transport Committee from the People Power Party, received data titled 'Top 30 Landlords with Jeonse Deposit Return Guarantee Incidents' from the Ministry of Land, Infrastructure and Transport and the Housing and Urban Guarantee Corporation (HUG). According to the data, landlord A, residing in Yangcheon-gu, Seoul, failed to return a total of 41.311 billion KRW in jeonse deposits to tenants from 2017 until June this year. The scale of the incidents amounts to 202 cases.

This represents the highest number of cases and amount of deposits not returned by a landlord to tenants during the same period. It is known that A aggressively engaged in 'gap investment,' purchasing houses with jeonse deposits, which led to these incidents.

HUG repaid 38.21 billion KRW in jeonse deposits for 186 of these cases on behalf of A, but there has been no record of recovering any repayment from A through claims.

Public guarantee institutions like HUG and private guarantee institutions such as SGI Seoul Guarantee provide jeonse deposit return guarantee insurance. If tenants who have subscribed to this insurance do not receive their deposits back from landlords after the contract period expires, these institutions pay the deposits to the tenants and then exercise subrogation rights against the landlords.

Besides A, large-scale deposit incidents have occurred in various places. B, residing in Mapo-gu, Seoul, defrauded 10.158 billion KRW from 50 tenants, and C in Gangseo-gu failed to return 9.48 billion KRW to 48 tenants.

In the provinces, D from Yesan-gun, Chungnam, did not return deposits amounting to 2.86 billion KRW to 12 tenants.

Over the past three and a half years, the top 30 landlords who failed to return jeonse deposits caused a total of 549 incidents amounting to 109.64 billion KRW. HUG repaid 96.664 billion KRW to tenants on their behalf but recovered only 11.731 billion KRW, or 12.1%, through subrogation claims against landlords.

From 2016 until September this year, the unrecovered amount from subrogated repayments by HUG and SGI Seoul Guarantee has reached 765.4 billion KRW.

The housing type with the lowest recovery rate for jeonse deposit subrogated repayments was multi-family housing. While apartments had a high recovery rate of 74%, multi-family housing was only 22%. Single-family houses had 56%, multi-unit houses 46%, row houses 43%, and officetels 34%.

Assemblyman Kim emphasized, "Hundreds of households' jeonse deposits and hundreds of billions of won in taxes are lost due to guarantee incidents caused by just one person," adding, "The responsible ministry must establish a system to prevent such incidents from occurring in advance."

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