HUG Deposit Return Guarantee to Cover 200,000 Korea Land and Housing Corporation (LH) Jeonse Rental Homes

[Financial News] The Korea Land and Housing Corporation (LH) will apply the Korea Housing & Urban Guarantee Corporation (HUG)'s jeonse deposit return guarantee to approximately 200,000 jeonse rental homes. Procedures for checking whether landlords are subject to guarantee restrictions and verifying property rights before signing a jeonse contract will also be strengthened. HUG, the Korea Housing Finance Corporation (HF) and Seoul Guarantee Insurance (SGI) will begin sharing information on landlords who have failed to return deposits in October.
According to LH on the 18th, LH and HUG signed a memorandum of understanding on jeonse deposit return guarantees for jeonse rental homes that day. As a result, approximately 200,000 LH jeonse rental homes will become eligible for HUG's deposit return guarantee starting Oct. 1.
A deposit return guarantee is a system under which a guarantee institution fulfills its guarantee obligation if a landlord cannot return the jeonse deposit after a lease expires. Under the LH jeonse rental program, the tenant finds a home, after which LH signs a jeonse contract with the landlord and leases the home back to the tenant.
LH has operated a separate guarantee management system, including requiring guarantee insurance enrollment during the jeonse rental contract process. Under the latest agreement, the two institutions will link their information from guarantee enrollment through post-incident management as HUG's deposit return guarantee is applied.
The ability to check risks before signing a contract will also be expanded. Starting on the 21st, users will be able to use the Ansim Jeonse App to check whether a landlord is subject to a prohibition on guarantee enrollment. They will also be able to review the property rights associated with a prospective home in advance. Lease information related to a tenant's opposability against third parties, which previously had to be checked separately through multiple institutions, will also be consolidated in the app.
Information barriers among guarantee institutions will also be lowered. Starting Oct. 1, HUG, HF and SGI will share information on landlords whose jeonse deposits were paid to tenants by a guarantee institution after the landlords failed to return them. A landlord restricted from obtaining a guarantee at one institution will also be barred from enrolling in deposit return guarantees at the other two.
Information on landlords with unpaid deposits held by the three institutions will be consolidated at Korea Credit Information Services and used in guarantee screening. Under the Enforcement Decree of the Credit Information Act, which was revised and took effect on Feb. 3, the institutions can collect and share the relevant information without the landlords' separate consent. However, landlords will be excluded from the guarantee ban if they repay the amount paid on their behalf by a guarantee institution.
The agreement also coincides with HUG's planned overhaul of its jeonse guarantee system. Starting with guarantee applications submitted on Oct. 30, HUG will introduce a preliminary limit review that checks the property's value and whether the landlord is prohibited from obtaining a guarantee before the tenant pays the balance and moves in. Currently, guarantee screening takes place after the balance is paid and the tenant has moved in. Going forward, the process will shift to confirming guarantee eligibility before the contract is carried out and issuing the guarantee after verifying the tenant's opposability against third parties following move-in.
From the same day, HUG will guarantee the full jeonse deposit within the applicable guarantee limit, rather than allowing tenants to select only part of the amount for coverage. If the landlord is under 19 as of the guarantee application date, a joint guarantee from a parent or other legal representative will also be required. In effect, protections will be strengthened in succession: risks will be checked before the contract, while the deposit will be protected through a return guarantee afterward.
LH plans to continue improving its management system so that tenants in jeonse rental homes can check risks involving the landlord and property during the contract process and remain protected when their deposits are returned after the contract ends. Further information is available on the LH Jeonse Rental Portal, and consultations can also be obtained through the jeonse rental call center.
LH President Lee Seong-hoon said, "Through this memorandum of understanding, we will further strengthen the deposit protection system for jeonse rental homes while also providing various services to improve residents' convenience. We will continue to expand cooperation with relevant institutions and steadily improve the system to build a strong housing safety net where people can live with peace of mind."
HUG President Choi In-ho said, "This memorandum of understanding is a meaningful cooperation model between HUG and LH aimed at safely protecting the deposits of housing-vulnerable groups and promoting the supply of public rental housing. The two institutions will continue to work closely together and fulfill their role as a strong pillar of housing stability for the public."
[email protected] Ahn Seung-hyun Reporter