"Granting Priority Purchase Rights and Housing Support to Jeonse Fraud Victims"… Government Proposes Special Act

Published 27 Apr.2023 10:08(KST)

Updated 27 Apr.2023 10:48(KST)

"Granting Priority Purchase Rights and Housing Support to Jeonse Fraud Victims"… Government Proposes Special Act

The government is proposing the "Special Act on Support for Jeonse Fraud Victims" to assist those affected by jeonse fraud. Additionally, policies such as policy mortgages that provide financial support when victims acquire their residence through auction or purchase a new home will also be promoted. This comes 17 days after President Yoon Seok-yeol instructed the preparation of support measures without blind spots on April 10, as the spread of jeonse fraud victims has become a serious issue.

On the 27th, the government announced that it will temporarily enact a special law to ensure the practical housing stability of jeonse fraud victims, expand financial and tax support, and implement a comprehensive support plan across ministries.

Minister of Land, Infrastructure and Transport Won Hee-ryong is briefing on support measures for victims of jeonse fraud at the Government Seoul Office in Jongno-gu, Seoul on the 27th. Photo by Dongju Yoon doso7@

First, the special law includes provisions such as ▲postponement of auctions and public sales ▲granting of preemptive purchase rights ▲apportionment of tax claims. The main goal is to support jeonse fraud victims in acquiring the homes they currently reside in through auctions. Additionally, upon request from victims, rental housing will be provided as public rental housing.

The special law’s support targets are victims who meet all six conditions: ▲tenants with legal opposability and a confirmed date ▲auction or public sale proceedings (including execution titles) on the leased housing ▲consideration of area and deposit for low-income rental housing (detailed requirements delegated to subordinate legislation) ▲cases where there is a suspicion of jeonse fraud intent such as investigation initiation ▲risk of multiple victims occurring ▲risk of a significant portion of the deposit not being returned.

The Ministry of Land, Infrastructure and Transport (MOLIT) will establish a Jeonse Fraud Victim Support Committee to determine whether applicants meet the criteria and decide victim status. The special law will be enforced immediately after promulgation (some provisions within one month) and will be limited to two years after enforcement, considering the lease contract period.

When jeonse fraud victims acquire existing leased housing that has gone through auction or public sale, or purchase new housing, financial support such as exemption from acquisition and registration tax, preferential treatment for special home loans, relaxation of LTV and DSR ratios, and Didimdol loans will be promoted. However, since financial support requires amendments to laws, the government plans to initiate legislation and amendments starting in May.

Furthermore, support for installment repayment of remaining jeonse loan debts after auction or public sale and postponement of credit information registration such as delinquency records will be provided. The emergency welfare support system, which provides assistance in crisis situations such as disasters, will also be applied to households affected by jeonse fraud to support living expenses.

On the 26th, members of the National Countermeasures 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@

Crackdown and punishment to eradicate jeonse fraud will be strengthened. MOLIT is currently conducting the first phase of planned investigations (January to May), selecting about 9,000 suspicious cases and investigating 2,091 cases. The second phase of investigation (40,000 cases) is scheduled for the second half of the year.

A bill to amend the Specific Economic Crimes Act, which currently applies to cases where the victim’s damage amount exceeds 500 million KRW, will be proposed in May. The amendment will impose aggravated punishment based on the combined damage amount when the methods of the crime are identical or similar. Additionally, suspects of jeonse fraud referred to the prosecution will also face administrative sanctions under related laws such as the Licensed Real Estate Agents Act and the Real Estate Transaction Act.

Meanwhile, the government expressed concerns that although the likelihood of new jeonse fraud contracts being made is low due to this comprehensive cross-ministerial support plan, damages from previously made jeonse fraud contracts expiring will continue for some time. So far, through four rounds of support announcements, low-interest loans and emergency housing have been provided to victims, but there are limitations in resolving housing insecurity for victims facing eviction due to auctions.