Incheon Followed by Dongtan: Surge in Jeonse Fraud Victims... Political Circles' Countermeasures

Recently, large-scale jeonse fraud damages have been occurring across the country. Starting from Michuhol-gu in Incheon, reports of damages have been received not only in the Seoul metropolitan area including Dongtan in Gyeonggi Province but also in local areas such as Gwangju, Busan, and Daegu, indicating a nationwide spread. Although the government has hastily introduced countermeasures, voices from the political sphere are calling for more proactive measures.

Won Hee-ryong, Minister of Land, Infrastructure and Transport, is speaking at the party-government meeting on the eradication of jeonse fraud and victim support held at the National Assembly on the 20th. Photo by Kim Hyun-min kimhyun81@

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As an initial measure against jeonse fraud, the government has implemented a suspension of auctions. This is to prevent tenants who have lost their deposits from being evicted onto the streets when the house is transferred through auction or public sale. Among the 2,479 households identified as victims of jeonse fraud, the government has ordered a suspension of auctions for at least six months starting from the 20th for loans from banks, savings banks, and mutual finance companies such as credit unions, NongHyup, and Saemaeul Geumgo.

Additionally, by amending the Local Tax Basic Act, even if the victimized house is transferred through auction or public sale, the tenant’s jeonse deposit will be repaid before any overdue local taxes. On the 20th, the Ministry of the Interior and Safety announced that it plans to expedite the passage of the amendment to the Local Tax Basic Act in the National Assembly, which stipulates that when a house is sold through auction, the tenant’s deposit should be repaid before local taxes such as property tax that are due after the confirmed date of the leasehold right.

The government is also actively considering measures to allow victims to exercise a right of first refusal when the victimized house is auctioned. On the 19th, Land, Infrastructure and Transport Minister Won Hee-ryong said, "Since exercising the right of first refusal could unilaterally harm other people's property rights and may be abused, we will carefully reach an agreement," adding, "President Yoon Suk-yeol has instructed us to actively review this."

Kim Seong-ju, Senior Deputy Chairman of the Policy Committee of the Democratic Party of Korea, is speaking at an emergency press briefing on measures against jeonse fraud held at the National Assembly on the 19th. Photo by Kim Hyun-min kimhyun81@

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In the National Assembly, a more proactive measure called the "Special Act for the Relief of Jeonse Fraud Victims" (Special Act for the Recovery of Deposits and Support for Housing Stability of Tenants) is also being discussed. On the 20th, Ahn Min-seok, a member of the Democratic Party of Korea, said on KBS Radio's "Choi Kyung-young's Strong Current Affairs," "Over the past year, victims have continuously demanded three things: suspension of auctions, right of first refusal, and state purchase followed by rental," adding, "Suspending auctions was just putting out the urgent fire, and now effective policies and alternatives need to be introduced."

He said, "Under current law, there is no way to compensate for economic crime victims. Therefore, a special law is necessary," and added, "It will take time to enact the special law after suspending auctions, but how can we prevent auctioneers from purchasing properties until then? How can we reduce damages and resolve this issue? Such responses and alternatives will be very necessary going forward."

Regarding the special law, Representative Ahn said, "It contains the principle of 'relief first, recovery later.' In other words, specialized debt purchase institutions like the Korea Asset Management Corporation (KAMCO) would prioritize purchasing deposit refund claims to provide relief," and explained, "Therefore, LH (Korea Land & Housing Corporation) or the Housing and Urban Guarantee Corporation would collaborate to purchase deposit claims and provide immediate relief to affected tenants."

However, Seong Il-jong of the People Power Party pointed out that there must be fair standards and that related discussions are necessary. On the same day, Representative Seong, who appeared together, said, "The law must have fair standards," adding, "To establish those standards, the ruling and opposition parties will probably need to put their heads together and have in-depth discussions on these matters."

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