Concerns Over Surge in 'Kkangtong Jeonse'... 'Lease Protection Act' Dormant in National Assembly

Gap Investment → High Risk of Becoming Empty Lease
Tenant Deposit Refund Failures Reach 87.2 Billion KRW in July
Ruling Party Urges "Prompt Passage of Lease Protection Act"

[Asia Economy Reporter Hyunju Lee] It has been revealed that the number of houses purchased solely with loans and jeonse deposits has exceeded 10,000 this year. These houses were bought through so-called ‘gap investment,’ which increases the likelihood of turning into ‘empty jeonse’ cases where the sum of the loan and deposit exceeds the house price as house prices decline. Although a revision to the Housing Lease Protection Act has been proposed to prevent tenant damages, the bill’s passage is being delayed.

According to real estate transaction report data submitted by the Korea Real Estate Board to Kang Dae-sik, a member of the National Assembly Land, Infrastructure and Transport Committee from the People Power Party, the number of reports where the combined amount of mortgage loans and rental deposits on the funding plan exceeded 100% of the house price increased by 41%, from 7,994 cases between March and December 2020 to 11,303 cases from January to July this year. Last year, it reached as high as 28,264 cases.

Rental fraud exploiting gap investment is also rampant. According to data on jeonse fraud arrests through planned investigations over the past three years submitted by the National Police Agency to Hong Seok-jun, a member of the People Power Party, there were 1,351 victims of jeonse fraud and 495 arrests. The amount of accidents where landlords failed to return jeonse deposits to tenants reached a record high of 87.2 billion won in July.

In the National Assembly, a Housing Lease Protection Act has been proposed to prevent this, but it has yet to pass the hurdle.

Notably, there is a bill proposed by Hong Seok-jun of the People Power Party that stipulates that tenants gain opposability against third parties immediately upon registering their resident registration, and that priority with respect to other real rights changes such as mortgages registered on the same day should follow the order of registration. There is also a bill by Jo Eun-hee that aims to prevent jeonse fraud and protect tenants’ rights from malicious landlords by legally requiring landlords to not refuse consent without justifiable reasons when a person intending to enter into a lease contract requests information about the house from the fixed-date granting agency.

Hong said, “As rental fraud methods become increasingly sophisticated and damages increase, the current Housing Lease Protection Act fails to adequately protect tenants due to institutional loopholes. Therefore, the National Assembly must pass related bills as soon as possible to establish protective measures so that no more victims of rental fraud occur.”

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