[2022 National Audit] Land, Infrastructure and Transport Committee Unanimously Calls for Measures Against Empty Lease Fraud

HUG Loss Burden Amount May Increase
Need to Prevent Abuse Cases of Return Guarantee System

[Image source=Yonhap News]

[Asia Economy Reporter Koo Chae-eun] On the 12th, voices calling for measures against "Kkangtong Jeonse" fraud poured out during the National Assembly Land, Infrastructure and Transport Committee’s audit.

During the Land Committee audit, inspections were conducted on the Korea Real Estate Board, HUG, Jeju Free International City Development Center (JDC), and Korea Land and Geospatial Informatix Corporation (LX), among others.

Han Jun-ho, a member of the Democratic Party of Korea, pointed out, “The risk of Kkangtong Jeonse is increasing, and as a government alternative, lowering the housing price applied to multi-family, townhouse, and urban-type residential housing from 150% to 140% of the current publicly announced price when subscribing to Jeonse deposit insurance, and notifying areas with Jeonse rates exceeding 90% as Kkangtong Jeonse caution zones, is expected to serve as a preventive measure. Especially, there are cases where new houses are deliberately overvalued in collusion with appraisers and illegal buildings are constructed to abuse the return guarantee system, so countermeasures are needed.”

Yoo Kyung-joon, a member of the People Power Party, pointed out that 97% of Jeonse deposit non-return incidents in the past 4 to 5 years were concentrated in five specific corporations and urged HUG and the Ministry of Land, Infrastructure and Transport to take measures.

Cho Oh-seop, a member of the Democratic Party of Korea, also expressed concern that the burden of accident amounts on HUG could increase due to the surge in unsold units. He emphasized the need for measures to increase the recovery rate of accident amounts. Shim Sang-jung, a member of the Justice Party, criticized, “HUG should have explained how much risk of Kkangtong Jeonse there is, the total amount expected, and what the alternatives are.”

The ruling and opposition parties also continued their disputes over the realization of publicly announced prices and the current Yoon Seok-yeol administration’s review of this realization.

Seo Il-jun, a member of the People Power Party, pointed out that the realization rate of publicly announced land prices shows significant differences by region and housing type and called for improvement measures from the Real Estate Board. He also inquired about the position on Seoul City’s recent proposal to establish Public Price Verification Centers in each city and province and introduce local government verification. Kim Soo-heung, a member of the Democratic Party, argued that the Yoon Seok-yeol administration’s review of the realization rate of publicly announced prices would benefit owners of high-priced and multiple houses.

On the other hand, Kim Hee-guk, a member of the People Power Party, said, “Don’t you feel ashamed that despite everyone knowing, the policy to realize publicly announced prices was pushed forward without looking even 2 to 3 years ahead?” He added, “The bigger problem is that the housing market is rapidly cooling, causing an issue where publicly announced prices surpass actual sale prices.”

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