The number of victims of jeonse deposit fraud has surpassed 40,000, despite a decline in new cases. The ongoing issues stem from past contracts, including unreturned deposits, victim recognition, and the lengthy processes of public auctions and housing purchases for recovery.
According to the Ministry of Land, Infrastructure and Transport, the Jeonse Fraud Victim Support Committee recognized an additional 658 cases in August, bringing the total number of recognized victims to 40,936 since the special law took effect in June 2023. Requests for emergency public auction deferrals have reached 1,225, while support for victims in housing, finance, and legal matters has totaled 77,805 cases.
This trend contrasts sharply with the decline in jeonse deposit return guarantee incidents. The Housing and Urban Guarantee Corporation (HUG) reported that the amount of claims peaked at 4.4896 trillion won in 2024 but fell by 72.3% to 1.2446 trillion won last year. The number of incidents also dropped from 20,941 to 6,677, a decrease of 68.1%. As contracts from the peak period of fraud and reverse jeonse expire, and with stricter guarantee eligibility criteria, new incidents appear to be stabilizing.
However, the number of tenants recognized as victims under the special law continues to rise, with hundreds added each month. Following 609 cases in July, August saw an additional 658, of which 627 were new or reapplications, and 31 were late recognitions after appeals. This indicates a significant lag between the occurrence of fraud and the recognition of victims.
The impact of the fraud has disproportionately affected younger tenants and those renting non-apartment properties. A staggering 97.6% of victims had deposits below 300 million won, and 76% were under 40 years old. In terms of housing types, multi-family homes accounted for 28.5% of cases, followed by officetels at 20.9%, multi-unit houses at 18.7%, and apartments at 13.3%. Additionally, 60.7% of all victims are concentrated in the metropolitan area.
The government is accelerating recovery efforts through public purchases of affected properties. As of the end of August, the Korea Land and Housing Corporation (LH) had acquired 10,718 units impacted by jeonse fraud. The number of purchases, which was only 90 in 2024, increased to an average of 654 units per month in the latter half of last year, with 5,727 units acquired from January to August this year, averaging 716 units monthly. The Ministry and LH are streamlining pre-purchase consultations and requests, implementing a fast-track process with set timelines.
There are indications that property acquisitions are improving deposit recovery rates. An analysis of 44 units purchased by LH last year, which included dividend and auction profit calculations, showed an average recovery rate of 78%. Notably, 28 units with secondary tenants received an average of 37.9% back solely from public auction dividends, but with LH's auction profit support, the average recovery rate increased to 73%.
However, an increase in property acquisitions does not mean that the suffering of victims will end immediately. Even after being recognized as victims, they must navigate public auctions, resolve rights issues, undergo LH purchase evaluations, and settle dividends and auction profits, which can take considerable time before they recover their deposits. The reduction in new fraud cases and the recovery of existing victims are separate issues.
Kim Dae-jin, a member of the Tenants 114 operating committee, stated, “While some institutional measures have been improved through amendments to the special law on jeonse fraud, the Housing Lease Protection Act, and the Licensed Real Estate Agent Act, it is still not enough. Many tenants continue to suffer, and we must remain vigilant to prevent such issues from arising again, necessitating ongoing attention and efforts for institutional improvements.”
* This article has been translated by AI.
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