SEOUL, South Korea – A downturn in South Korea’s home prices is causing pain in the country’s unusual rent-free rental system that benefited landlords and tenants alike during aIn the “jeonse” scheme, tenants put up a deposit typically worth as much as 70% of the home’s value, then live without paying rent for two years until the landlord returns the full amount.
That means she will owe at least 33 million won for the loan she took out on her jeonse contract expiring next month. 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 Corporation, 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.