[2020 National Audit] Spread of Gap-Free Investment in Seoul Villas..."HUG Jeonse Loan Side Effects"

[Asia Economy Reporter Donghyun Choi] 'No-gap investment' transactions, where housing is purchased without spending a single penny, are spreading mainly in villas. This is pointed out as a side effect of the Jeonse loan system by the Housing and Urban Guarantee Corporation (HUG).

According to the 'Status of Safe Loan Guarantees for Multi-family, Multi-unit, and Multi-household Housing (Villas)' submitted by the Ministry of Land, Infrastructure and Transport and HUG to Kim Sang-hoon, a member of the Land, Infrastructure and Transport Committee of the People Power Party, the Jeonse guarantee amount with a limit of 150% of the publicly announced price, which was 167.1 billion KRW (1,287 cases) in the first quarter of last year, increased fourfold to 667.8 billion KRW (4,254 cases) in the third quarter of this year.

The Jeonse loan amount for villas in Seoul, which increased by an average of 100 billion KRW per quarter, slightly decreased from 502.7 billion KRW in the fourth quarter of last year to 425.5 billion KRW in the first quarter of this year, but surged again to 559.9 billion KRW in the second quarter and rose to 667.8 billion KRW in the third quarter, reaching the 600 billion KRW level.

In particular, in Gangseo-gu, Seoul, where many villas are distributed, the amount increased from 16.9 billion KRW (140 cases) in the first quarter of last year to 77.9 billion KRW (591 cases) in the fourth quarter of the same year, and surged to 100.3 billion KRW (689 cases) as of the third quarter of this year. It increased about sixfold over two years. Eunpyeong-gu also increased about fivefold from 12.5 billion KRW (111 cases) in the first quarter of last year to 62.2 billion KRW (427 cases) in the third quarter of this year.

In a situation where it is difficult to estimate the market price of villas, HUG Jeonse loans, which set the housing price limit up to 150% of the publicly announced price, are recently being used for no-gap investment. No-gap investment allows the purchase and Jeonse lease of villas without equity capital, but if the Jeonse deposit rollover is not smoothly carried out, it immediately turns into a "Kkangtong Jeonse" (empty Jeonse). Kkangtong Jeonse refers to properties where the Jeonse price approaches or exceeds the sale price, making it difficult to return the Jeonse deposit to tenants even after selling the house later. Especially, when the loan is funded by HUG's Jeonse guarantee, it directly leads to guarantee accidents, and the tenants caught in the middle also face increased inconvenience in reality.

Assemblyman Kim Sang-hoon said, "In areas of Seoul with many villas, more than 40% are said to be no-gap investments," and pointed out, "Since this could cause a large-scale Jeonse deposit accident, HUG and the relevant ministries should promptly prepare measures to detect such risks in advance."

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