Villa King Rampages in the Seoul Metropolitan Area, Only 28 Cases of Deposit Insurance Penalty Imposed

[Asia Economy Reporter Kwak Min-jae] It has been revealed that some rental business operators, so-called 'Villa Kings,' who manage tens or hundreds of rental deposits, have not complied with the obligation to subscribe to rental deposit return guarantee insurance, yet proper enforcement has not been carried out. Moreover, the fines imposed average only about 17.15 million KRW per case, leading to criticism that the penalties are too lenient.

A view of the alley with newly built villas in Hwagok-dong, Gangseo-gu, Seoul.
Photo by Kwak Minjae

According to data submitted by the Ministry of Land, Infrastructure and Transport to Park Sang-hyuk, a member of the National Assembly Land, Infrastructure and Transport Committee from the Democratic Party of Korea, the number of cases where local governments imposed fines on registered rental business operators for violating the obligation to subscribe to rental deposit return guarantee insurance was 37 nationwide and 28 in the metropolitan area over the past year.

Under the Private Rental Housing Act, rental business operators who have not subscribed to guarantee insurance must pay a fine of up to 10% of the deposit. Local governments impose fines of 5% of the deposit if the period without insurance is up to 3 months, 7% if up to 6 months, and 10% if over 6 months. However, the total amount of fines cannot exceed 30 million KRW.

In the metropolitan area, damage from unreturned jeonse deposits has been concentrated since last year, but the number of fines imposed last year was 17 cases in Seoul, 7 in Gyeonggi, and 4 in Incheon, totaling 28 cases. In other regions, fines were imposed in 4 cases in Busan, 2 in Gyeongbuk, 2 in Gyeongnam, and 1 in Chungnam.

It is known that the government and local governments responded belatedly after a surge in jeonse fraud cases. Gangseo-gu in Seoul conducted a full survey on whether 'malicious landlords' listed as multi-home debtors under the Housing and Urban Guarantee Corporation (HUG) were subscribed to guarantee insurance and found 254 households without subscription. Additional investigations for imposing fines are currently underway.

Although the government has announced measures to strengthen management to ensure rental business operators properly fulfill their obligation to subscribe to guarantee insurance, there are criticisms that the penalties are too lenient. The Private Rental Housing Act’s fine imposition criteria include a clause stating that if there are two or more violations, the highest fine amount is imposed. According to this, no matter how many households a rental business operator causes damage to, the fine cannot exceed about 45 million KRW.

In the case of the late 'Villa King' Kim Mo, who was registered as a rental business operator for 462 houses nationwide, only 44 houses were subscribed to guarantee insurance. Even if he violated the obligation to subscribe to guarantee insurance for 418 houses, the maximum fine would be only 45 million KRW.

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