[The Editors' Verdict] In an Era of Uncertainty, Restoring Trust in Policy Comes First

Minister of Land’s “Abolish Jeonse” Remarks Spark Controversy
Backtracks on Statement, but Only Fuels Market Confusion

"To the person who moves this tree to the North Gate, I will give ten gold coins." During the reign of Duke Xiao of Qin in the Warring States period, the prime minister Shang Yang, aiming to wash away the widespread distrust among the people, erected a tree measuring three zhang (三丈: approximately 9 meters) at the South Gate and posted this message. However, at first, no one touched it, and only after the reward was increased did someone move the tree. Shang Yang immediately gave the promised reward. After proclaiming the law, the people trusted the government and obeyed the law well. This story shows the success of policies implemented after building trust.

Since last year, as the jeonse fraud cases that began mainly in Michuhol-gu, Incheon, and Hwagok-dong, Gangseo-gu, Seoul, have expanded nationwide, the ‘uselessness’ or ‘abolition’ of the jeonse system itself has become a hot topic. At a recent press conference marking his first anniversary in office, Won Hee-ryong, Minister of Land, Infrastructure and Transport, said, "The jeonse system has played a role in our society so far, but I think its lifespan has come to an end," mentioning the ‘abolition of the jeonse system,’ which seems to have ignited the debate in earnest. Consequently, the market is now embroiled in controversy over the feasibility and effectiveness of the government’s policy to abolish the jeonse system.

Minister Won also mentioned the possibility of introducing an ‘escrow’ account that would lock jeonse deposits in financial institutions, saying, "We will consider all possible methods." This sparked a heated debate in the market about whether this system could really be a solution to jeonse fraud. The escrow system involves tenants entrusting their jeonse deposits to a financial institution rather than the landlord, with the deposit returned upon contract expiration.

This is practically the first time that the head of the housing policy department has so strongly mentioned reforming the jeonse system, so the market paid close attention to this statement as a government signal that ‘jeonse might disappear.’

However, about a week later, on the 23rd (local time), while in Warsaw, Poland, Minister Won reversed his stance, saying, "We will not take an approach to eliminate jeonse." Regarding the escrow introduction, he drew a line, stating, "I mentioned it only to indicate that some people talk about even the most extreme option of escrow," and "We are not considering it." Furthermore, he emphasized, "We have not reviewed it so far."

It is difficult to judge rashly whether the minister truly did not consider abolishing the jeonse system or introducing the escrow system, or what his true intentions are. However, given that jeonse fraud and reverse jeonse issues have become social concerns, it is regrettable that the minister of the responsible department stirred market confusion with premature remarks. After all, it was said that ‘real estate public sentiment’ influenced the last presidential election, and he is the head of the department that formulates and implements core policies.

Confucius reportedly answered his disciple Zigong’s question about the essentials of governance by saying, "Sufficient food (足食), strong military (足兵), and gaining the trust of the people (民信)." Among these, he regarded ‘trust’ as the greatest asset.

Currently, in the real estate market, while apartment transaction volumes in Seoul are recovering, local areas suffer from severe ‘transaction drought,’ showing a clear polarization. Concerns about reverse jeonse due to economic recession and high interest rates are growing. Real estate project financing (PF) loans are a trigger for financial sector instability. It is a critical time for consistent government policies that can resolve uncertainties and provide trust to the public.

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