Jeonse Deposit Defaults... Nationwide Leasehold Registrations Surpass 4,000 Cases for the First Time

6,194 Leasehold Registration Applications in June... Record High
Expected to Increase Further Due to Revised Housing Lease Protection Act
Relaxation of Jeonse Deposit Return Loan Regulations Remains a Variable

The number of nationwide applications for leasehold registration orders has surpassed 4,000 for the first time ever. This is attributed to a significant increase in tenants who have not been able to recover their jeonse deposits due to the ‘reverse jeonse crisis’ caused by the real estate market slump and falling jeonse prices. In particular, with the revised Housing Lease Protection Act allowing leasehold registration without the landlord’s confirmation starting from the 19th, the number of applications is expected to rise further.

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According to the Supreme Court’s Registry Information Plaza on the 21st, the number of applications for leasehold registration orders for collective buildings in June reached 4,194, marking the highest monthly figure ever recorded. This represents a 14.3% increase from May (3,670 cases) and more than a fivefold increase compared to the same month last year (817 cases).

This year, the number of applications for leasehold registration orders was 2,081 in January, 2,799 in February, and exceeded 3,000 in March with 3,414 cases. Following 3,045 cases in April and 3,670 in May, the number finally surpassed 4,000 last month.

Leasehold registration is applied for at the court by tenants to maintain their right to recover the deposit when the landlord fails to return the deposit at the end of a jeonse or monthly rent contract. Tenants who complete leasehold registration retain their right to oppose and priority repayment even after moving out.

By region, Seoul saw an increase from 1,243 cases in May to 1,422 cases in June, a 14.4% rise. Incheon increased from 783 to 954 cases, up 21.8%, and Gyeonggi rose from 1,007 to 1,144 cases, a 13.6% increase. In the provinces, applications for leasehold registration orders increased significantly in Ulsan, Gyeongbuk, and Jeju. Ulsan saw a 50% increase from 26 to 39 cases during this period. Gyeongbuk also rose by 40.0%, from 20 to 28 cases, while Jeju and Gangwon recorded growth rates in the 30% range.

The number of applications for leasehold registration orders is expected to increase further. From the 19th, leasehold registration became possible without prior notification to the landlord. Until now, leasehold registration was only completed after confirmation that the court’s leasehold registration order decision was delivered to the landlord. This made it difficult for tenants to complete leasehold registration if the landlord died or intentionally avoided delivery. However, with the revised law in effect, leasehold registration can be completed as soon as the court’s leasehold registration order is issued, even before the landlord is notified of the decision.

However, the government’s easing of jeonse deposit return loan regulations for one year starting at the end of this month is a variable. To cope with the reverse jeonse crisis, the loan limit can be increased by applying a debt-to-income ratio (DTI) of 60% instead of the debt service ratio (DSR) of 40% for individual landlords. This may reduce the number of cases where tenants cannot immediately recover their deposits.

Park Hapsu, an adjunct professor at Konkuk University Graduate School of Real Estate, said, “Although concerns about reverse jeonse remain as the expiration of contracts signed two years ago will fully come due in the second half of this year, the easing of jeonse deposit return loan regulations will relieve landlords’ financial burdens, which could gradually reduce the number of leasehold registration applications.”

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