Government Strengthens Monitoring of Risk Areas for 'Kkangtong Jeonse' and Support Measures for Jeonse Fraud Victims

Tenants' anxiety is increasing due to "Kkangtong Jeonse." The photo shows a real estate listing posted at an agency in Jamsil, Seoul. (Photo by Asia Economy DB)

[Asia Economy Reporter Ryu Tae-min] The government has decided to disclose the list of landlords who habitually fail to return security deposits to prevent damages from Jeonse fraud. Additionally, to alleviate the burden of Jeonse fraud on vulnerable groups, such as youth and newlyweds, the government will provide an additional 10 percentage point discount on guarantee fees for socially disadvantaged groups. Areas with a high risk of so-called ‘Kkangtong Jeonse’ (empty-can Jeonse) will be designated as caution zones and placed under special management.

The Ministry of Land, Infrastructure and Transport announced these measures as part of the ‘Housing Sector Livelihood Stabilization Plan’ at the ‘3rd Emergency Economic and Livelihood Meeting’ presided over by President Yoon Seok-yeol.

Due to the rise in Jeonse price ratios this year, in some local areas, the sale price has fallen below the Jeonse contract price, raising concerns about the occurrence of ‘Kkangtong Jeonse,’ where tenants cannot recover their security deposits. In response, the Ministry plans to notify local governments to designate such areas as caution zones to prevent risky contracts and implement special management when warning signs are detected. The criteria for caution zones are areas where the Jeonse price ratio exceeds 90% or where the Jeonse price ratio surpasses the auction price ratio. Special management in caution zones will include joint inspections of risky listings with local governments, real estate agent education, and monitoring of abnormal transactions.

Support policies for victims of Jeonse fraud will also be strengthened. Tenants, who are relatively weaker parties in lease relationships, are increasingly exposed to Jeonse fraud due to lack of information, resulting in a rise in damage cases. According to the Ministry of Land, Infrastructure and Transport, as of June, the amount of damage caused by Jeonse fraud reached 340.7 billion KRW, more than four times the 79.2 billion KRW recorded in 2018. The amount of subrogation payments also increased more than fivefold to 294.6 billion KRW as of June, compared to 58.3 billion KRW in 2018.

Accordingly, the Ministry plans to create a safe transaction environment through information provision and activation of guarantee subscriptions. For guarantee subscriptions, the discount rate for socially disadvantaged groups such as multi-child families, youth, and newlyweds will be expanded by 10 percentage points from the current 40-50% to 50-60%. Additionally, the Ministry plans to consider raising the current security deposit limits eligible for guarantee subscriptions from 700 million KRW in the metropolitan area and 500 million KRW in local areas.

Landlord management will also be strengthened. The Ministry will disclose the list of landlords who habitually fail to return security deposits through legal amendments and will check compliance with guarantee subscription obligations for registered rental business operators. Habitual non-return landlords are defined as those who have been subject to forced execution or bond preservation measures two or more times in the past three years due to failure to return security deposits. Furthermore, a database will be established to allow tenants to verify market price information, utilizing HUG guarantee screening data, financial institution loan screening data, and real estate price information from the Korea Real Estate Board and KB.

Emergency housing stabilization measures to support victims of Jeonse fraud will also be enhanced. First, the government plans to promptly support housing stability through emergency Jeonse loan programs for fraud victims. Various options, including the use of HUG social contribution funds, are under review. Additionally, support centers will be established to provide legal consultation referrals and match emergency financial support services.

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