"Easier Subscription to Jeonse Return Guarantee: HUG Appraisal Value Also Used as Housing Price"

Ministry of Land, Infrastructure and Transport Announces 'Regulatory Normalization Plan for Housing Market Stability and Improvement of National Residential Environment'
Non-Apartment Official Prices to Apply HUG Appraisal Value Upon Objection

It will become easier to subscribe to jeonse deposit insurance for non-apartment properties such as villas. Recently, due to concerns about jeonse fraud and reverse jeonse, the subscription criteria for deposit insurance were strengthened to 126% of the publicly announced price. The government will maintain this ratio but allow landlords to request a review of the publicly announced price, enabling the use of an appraisal value calculated by the Housing and Urban Guarantee Corporation (HUG).

A villa complex in the Huam-dong area of Yongsan-gu, Seoul.
Photo by Yonhap News

On the 12th, the Ministry of Land, Infrastructure and Transport announced 32 follow-up regulatory improvement tasks from the 'Public Livelihood Discussion Meeting' at the government Sejong office, including this measure. On the same day, Kim Gyu-cheol, Director of the Housing and Land Office at the Ministry, said, "We intend to allow selective use of the appraisal value, which is a system recognized by the state."

If landlords request a review of the publicly announced price, the appraisal value calculated by an appraisal firm selected by HUG can be applied as the subscription criterion for deposit insurance. When landlords request an appraisal from HUG, HUG commissions an appraisal firm to conduct the appraisal. At this time, the appraisal cost is borne by the landlord. The appraisal takes about two weeks.

Director Kim said, "Since the appraisal is for guarantee purposes, it cannot always be higher than 126% of the publicly announced price," adding, "However, it will be an amount derived through a proper appraisal procedure regarding the housing value."

According to the Ministry of Land, Infrastructure and Transport, HUG will select 5 to 6 appraisal firms through a bidding process. This system improvement is expected to be applied by the end of July.

The criteria for selecting appraisal firms include whether they can cover non-apartment properties nationwide and whether they have appraisal experience and expertise.

Director Kim said, "HUG expects 20,000 to 30,000 annual review requests," adding, "Normally, individuals have to pay about 500,000 KRW for an appraisal, but since appraisals will be commissioned in bulk through appraisal firms, we will make it available at a more affordable price."

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