is causing pain in the country’s unusual rent-free rental system that benefited landlords and tenants alike during a long surge in residential property prices.
Jeonse tenancy has been particularly popular among people in their 20s and 30s, who could not afford the full price of a home but could use the system to get a toehold into the Korean dream of home ownership. Ms Yoo Ha-jin, 28, regrets not getting insurance for her jeonse deposit when she signed in March 2021. Her bankrupt landlord told her in December the property would be auctioned and she could expect to get around 45 per cent of her deposit back at most.
Insurance claims for failed jeonse repayments more than doubled last year to a record 1.17 trillion won, according to Korea Housing and Urban Guarantee Corp, one of the country’s three major guarantors.Financial authorities are working closely with other agencies to support jeonse tenants and landlords having difficulty with refunds, said an official at the Financial Services Commission.
“The jeonse crisis poses limited macroeconomic risks, yet it is still another part of the whole property market fallout,” said economist Moon Hong-cheol at DB Financial Investment.