Jeonse guarantee fraud by foreign landlords reaches 17.8 billion won over five years

[Financial News] It has been revealed that claims for Jeonse guarantees by foreign landlords have amounted to 17.8 billion won over the past five years. Of the deposits paid to tenants on behalf of foreign landlords, 6.7 billion won has not yet been recovered by the Korea Housing & Urban Guarantee Corporation (HUG).
According to data submitted by HUG to Rep. Ahn Tae-joon of the Democratic Party of Korea, a member of the Land, Infrastructure and Transport Committee of the National Assembly, on the 20th, a total of 82 incidents involving Jeonse deposit return guarantees related to foreign landlords were recorded from 2022 to August of this year. The amount involved in these incidents reached 17.8 billion won.
Looking at the data by year, the scale of incidents surged from 3 cases and 400 million won in 2022 to 26 cases and 5.6 billion won in 2023. It increased to 33 cases and 8 billion won in 2024, followed by 15 cases and 2.9 billion won last year, and 5 cases and 900 million won through August of this year. During this period, the total amount of subrogation payments made by HUG to tenants on their behalf was 14.7 billion won. Of this amount, only 8 billion won was recovered, and the remaining 6.7 billion won has not yet been recovered. This accounts for approximately 46% of the cumulative subrogation payments.
The recovery rate of subrogation payments from foreign landlords who repeatedly caused guarantee defaults was even poorer. Over the past five years, there were two foreign landlords who caused guarantee defaults at least twice, resulting in a total of eight incidents worth 1 billion won. Although HUG paid 1 billion won to tenants on their behalf, only 100 million won has been recovered to date. This means that 900 million won, or 90% of the total subrogation payment, remains unrecovered. In particular, it was confirmed that six Jeonse guarantee defaults totaling 800 million won occurred involving the single foreign landlord with the highest number of incidents. HUG is proceeding with legal action and forced auctions regarding these unrecovered debts.
The volume of Jeonse deposit return guarantees handled for foreign landlords increased from 425 cases and 98 billion won in 2022 to 666 cases and 144.2 billion won in 2023, and 678 cases and 147.4 billion won in 2024. Last year, it recorded 639 cases and 135.6 billion won, and as of August this year, it was tallied at 403 cases and 84.6 billion won, showing a steady upward trend.
Representative Ahn stated, "Since the Jeonse guarantee is ultimately a system that pays tenants their deposits in advance using public guarantee funds, we must thoroughly manage everything from preventing recurring incidents to recovering subrogation payments," adding, "We must identify landlords with a history of accumulated incidents early on and inspect the management system to ensure there are no loopholes."

[email protected] Song Ji-won Reporter