[Exclusive] 13,000 Guarantee Insurance Rejections Managed in the Dark... Tenants Still in a Blind Spot

[Financial News] The number of applications for the Korea Housing & Urban Guarantee Corporation (HUG)'s 'deposit return guarantee' rejected over the past five years has exceeded 10,000, but no post-rejection tracking and management system was found to be in place. Critics say this has created a kind of blind spot, particularly for tenants left outside the policy safety net.
According to data HUG submitted to the office of Boo Seung-chan of the Democratic Party of Korea on the 28th, 13,503 applications for deposit return guarantees were rejected between 2021 and August 2026.
HUG's rejection count rose from 2,002 in 2021 to 2,351 in 2022 and 2,596 in 2023, reaching 2,814 last year, an increase of 8.4%.
The annual average comes to 2,530.6 cases. This year alone, 850 applications had been rejected as of August. Since eligibility requirements were tightened in July, this year's total is expected to be similar to or exceed the annual average.
The problem is that while more than 10,000 applications for deposit return guarantees were being rejected, neither HUG nor the Ministry of Land, Infrastructure and Transport (MOLIT) had a post-rejection tracking and management system for the affected homes. Critics say this infringed on tenants' right to know about the risks associated with rejected homes and about properties that had been identified as risky during the policy screening process.
HUG says it destroys the data in accordance with the Personal Information Protection Act. An HUG official said, "We do not track whether an actual guarantee incident or auction occurs in cases where a guarantee application was rejected, nor do we maintain separate records." The official added, "It is difficult to determine because we do not collect data on the relevant lease contract afterward." HUG explained that post-rejection tracking falls outside the scope of its work, given that its primary responsibility is providing guarantees.
Despite HUG's explanation, experts agree that there is clearly a blind spot. This is why some are saying, "It cannot be considered HUG's fault, but clear improvements are needed."
Experts suggest that improvements should be pursued by establishing oversight authority, easing access to HUG, and making use of licensed real estate agents.
Park Sang-heum, a real estate lawyer at Woori Deul Law Firm, said, "HUG currently has no authority at all to oversee properties whose guarantee applications have been rejected." He added, "It should be granted some authority so that administrative guidance can be given to landlords, such as requiring them to lower the jeonse deposit when a property is ineligible for coverage." Under current law, HUG guarantee insurance cannot be obtained when the sum of the jeonse deposit and senior liens exceeds 90% of the home's value. The explanation is that deposits should be lowered so tenants can obtain insurance and receive protection.
He also said that prospective tenants' access to HUG should be improved. Park said, "If a tenant asks HUG whether guarantee insurance is available for a villa they are considering leasing, they should be able to receive a prompt answer, but there is currently no system for that." He added, "We need to create such a system to protect tenants."
Some have also called for using licensed real estate agents. Kim Ye-rim, managing partner at Sim Mok Law Firm, said, "Licensed real estate agents are experts who know the market better than anyone." She proposed, "When front-line agents handle lease contracts, a system should be introduced requiring them to notify prospective tenants in advance if a property has a history of guarantee rejection or a high rate of guarantee incidents." The Korea Association of Realtors recently became a statutory organization and is strengthening its self-regulation, internal oversight, and dispute mediation functions.
Others argued that HUG should clearly explain the reasons for rejecting guarantee insurance. Shin Ho-yong, a lawyer at Yoonkang Law Firm, advised, "Whether tenants can obtain guarantee insurance is an extremely important factor. HUG should provide a more detailed explanation of rejected applications, including the reasons, so that tenants can make informed decisions about whether to sign a contract."
Boo said, "As a public guarantee institution, HUG needs to use the risk information identified during its screening process to protect tenants and prevent jeonse fraud." He added, "An information-sharing system must be established so that tenants seeking to sign new contracts can check a property's history of guarantee rejection and the reasons for it before signing."  
[email protected] Kim Hyung-gu and Kwon Jun-ho Reporter