Kwon Hyung-taek, HUG President, "Reforming High Price Review System Will Have Housing Supply Effect"

Surge in Sale Review Applications After System Improvement
Strict Punishment Policy for Jeonse Fraud Increase
Plan to Disclose List of High-Amount and Habitual Debtor Landlords
Negative Stance on Opening Sale Guarantee Market

Kwon Hyung-taek, President of the Housing and Urban Guarantee Corporation (HUG), is delivering a greeting at the National Assembly's Land, Infrastructure and Transport Committee's audit held on the 14th of last month in Yeouido, Seoul.
[Image source=Yonhap News]

Kwon Hyung-taek, president of the Housing and Urban Guarantee Corporation (HUG), said, "Since the revision of the high-priced pre-sale price review system, there has been a flood of postponed pre-sale review applications," adding, "We expect it to have an effect on housing supply."

President Kwon made these remarks on the 22nd during a press briefing held at the Government Complex Sejong regarding the partially improved high-priced pre-sale price review system implemented last September.

After fully revising the high-priced pre-sale price review system in February, HUG faced ongoing concerns about arbitrariness. In response, in September, it reformed the system by partially improving the standards for calculating nearby market prices and selecting comparable projects, as well as reasonably reflecting regional pre-sale price levels.

An executive from HUG who attended the briefing said, "We made improvements in February and September, and many projects that had postponed guarantee applications are now applying. However, just because the system has been improved does not mean all pre-sale prices will rise; we need to observe the actual pre-sale activities by region."

Regarding the recent increase in jeonse (long-term lease) fraud, President Kwon emphasized that "malicious landlords" will be severely punished to eradicate illegal activities.

In fact, as various types of jeonse fraud have increased recently, HUG has established an "Emergency Response Plan for Jeonse Fraud" and is actively responding. President Kwon said, "In the past, tenants who suffered from jeonse fraud had to file lawsuits themselves, but now we plan to respond not only civilly but also criminally through our Criminal Advisory Committee," adding, "This is to prevent recurrence and to strictly punish offenders."

HUG plans to swiftly recover debts from multi-homeowners through payment orders by public notice delivery under the Special Act on Promotion of Litigation, effective January 21 next year, and will actively support the disclosure of lists of high-value and habitual debtors.

Regarding some claims that "housing pre-sale guarantees should be opened to the market," HUG expressed the view that it is desirable for the public institution HUG to continue to be solely responsible for this to ensure national housing stability.

President Kwon said about the Fair Trade Commission's recommendation to improve HUG's monopoly on pre-sale guarantee business, "If pre-sale prices were fully liberalized, prices would rise endlessly, burdening ordinary citizens, and if the economy suddenly worsens, it would cause a continuous crash, shocking the national economy," adding, "Currently, there is a positive function as it controls prices when they rise and also acts as a brake when they fall."

He continued, "Even if there are drawbacks to HUG managing the business, I believe the positive functions far outweigh them," and said, "The argument to leave everything to the market and open it up, as some outside parties claim, is not appropriate from the perspective of national housing stability."

Additionally, HUG explained that it is reviewing improvements related to the mandatory subscription to jeonse deposit guarantee insurance for rental business operators, which began in August.

Existing rental business operators must subscribe to guarantee insurance when signing new or renewal contracts, but there has been controversy because subscription is denied if the operator's loan amount exceeds 60% of the market price or if the loan plus rental deposit exceeds 100% of the market price.

Regarding this, a HUG official said, "Existing rental business operators have a grace period for subscription until January 15 next year," adding, "We are discussing with the Ministry of Land, Infrastructure and Transport on how to handle this guarantee, and we expect a conclusion soon."

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