Over 90% Debt Ratio: 1 in 5 'Kkangtong Houses' Failed to Return Jeonse Deposits

National Assembly Land, Infrastructure and Transport Committee Member Maeng Seong-gyu of the Democratic Party
Accounts for 75.3% of Total Guarantee Accident Amount
"Concentrated in Multi-family Housing, Urgent Need for Government Measures"

One in five of the five 'Kkangtong houses' with a debt ratio exceeding 90% experienced a guarantee accident due to landlords failing to return the jeonse deposit on time.

According to data submitted by the Housing and Urban Guarantee Corporation (HUG) to Maeng Seong-gyu, a member of the National Assembly Land, Infrastructure and Transport Committee from the Democratic Party of Korea, the guarantee accident rate for houses with a debt ratio of 90% or higher was 22.0%. The guarantee accident rate increased more than threefold over three years, from 6.8% in 2020 to 7.9% in 2021 and 12.1% in 2022.

On the 26th, members of the National Countermeasure Committee for Jeonse Fraud and Empty Jeonse Victims held a press conference in front of the main building of the National Assembly in Yeouido, Seoul, urging the enactment of a special law on Jeonse fraud. Photo by Hyunmin Kim kimhyun81@

The guarantee accident amount for Kkangtong houses stood at 1.3941 trillion KRW as of the end of June. This accounts for 75.3% of the total guarantee accident amount (1.8525 trillion KRW).

The debt ratio is calculated by dividing the sum of the homeowner’s mortgage loan and other secured amounts plus the jeonse deposit by the house price. If this ratio exceeds 80%, the house is considered a Kkangtong house, meaning that even if the house is sold, tenants may not be able to recover their deposits. If the debt ratio exceeds 90%, tenants are highly likely to lose their deposits even if the house price falls slightly.

Damage from non-returned deposits in Kkangtong houses has been concentrated in multi-family houses (villas). As of the end of June this year, multi-family houses accounted for 62.5% of guarantee accidents among houses with a debt ratio exceeding 90%. This figure was only 4.4% in 2018. The proportion has sharply increased since 2019.

In response, the government reduced the maximum guarantee limit for jeonse loan guarantees on contracts with a debt ratio exceeding 90% from 80% to 60% of the jeonse deposit in January. The intention is to prevent tenants from entering into jeonse or monthly rental contracts on houses with high loan amounts by lowering the loan guarantee limit.

Assemblyman Maeng Seong-gyu said, “In the case of multi-family houses with a debt ratio exceeding 90%, vulnerable groups such as young people who lack information have no choice but to use them,” and added, “The government should prepare measures to maximize information provision to prevent repeated jeonse fraud.”

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