"Afraid of Not Getting Jeonse Deposit Back"... Surge in Guarantee Subscriptions Since Moon Administration Inauguration

Accident Amount: 3.4 Billion in 2016 → 344.2 Billion in 2019

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

[Asia Economy Reporter Moon Jeong-won] Since the inauguration of the Moon Jae-in administration, concerns have grown that tenants may not be able to get their jeonse deposits back, leading to a sharp increase in the number of tenants subscribing to the Jeonse Deposit Return Guarantee provided by the Housing and Urban Guarantee Corporation (HUG).

According to data submitted by HUG to Moon Jeong-bok, a member of the National Assembly's Land, Infrastructure and Transport Committee from the Democratic Party of Korea, the number of subscriptions to the Jeonse Deposit Return Guarantee increased more than 6.3 times, from 24,460 cases (guaranteed amount of 5.1716 trillion KRW) in 2016 to 156,095 cases (30.6444 trillion KRW) last year.

As of August this year, the number of subscriptions reached 112,495 cases (22.913 trillion KRW), an eightfold increase over the past five years.

The amount of accidents where HUG compensated tenants after landlords defaulted on deposits rose more than 100 times, from 3.4 billion KRW (27 cases) in 2016 to 344.2 billion KRW (1,630 cases) last year.

The accident amount as of August this year was 325.4 billion KRW (1,654 cases), and it is expected to exceed 500 billion KRW by the end of the year.

The accident rate of the Jeonse Deposit Return Guarantee, which represents the ratio of accident amount to matured guaranteed amount, also increased elevenfold from 0.31% in 2016 to 3.43% last year.

The Jeonse Deposit Return Guarantee is a product that tenants subscribe to with the guarantee institution HUG in case they cannot get their jeonse deposit back. The guarantee fee rate is 0.128% per year for apartments and 0.154% per year for other types of housing for individuals.

As of August this year, the subscription distribution by housing type was highest for apartments at 61.4% (15.7916 trillion KRW), followed by multi-family housing at 18.2% (3.6235 trillion KRW), officetels at 12.8% (2.1887 trillion KRW), and multi-unit houses at 3.8% (630.5 billion KRW).

With the recent jeonse shortage causing jeonse prices to soar in Seoul and other metropolitan areas, concerns are rising that more jeonse deposit accidents may occur in the future.

Assemblyman Moon Jeong-bok emphasized, "As Jeonse Deposit Return Guarantee accidents surge, the housing stability of ordinary citizens is being threatened," and added, "Measures are needed to reduce guarantee accidents through cooperation between guarantee institutions and lending institutions."

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