LH chief opposes land minister's idea of abolishing 'jeonse'
Korea Land and Housing Corp. (LH) CEO Lee Han-jun speaks during a press conference at the company's headquarters in Jinju, South Gyeongsang Province, May 18. Courtesy of LH
By Park Jae-hyuk
Korea Land and Housing Corp. (LH) CEO Lee Han-jun has attracted public attention by speaking out against the idea of abolishing “jeonse,” a unique Korean house rental system, which was initially proposed by Minister of Land, Infrastructure and Transport Won Hee-ryong, who supervises the state-run real estate developer, according to industry officials, Monday.
Lee told reporters last Thursday that it is inappropriate at this moment to intentionally abolish the nation's unique system in which tenants give landlords huge returnable deposits, without paying monthly rent.
“Jeonse has served as an important shortcut for Koreans to live in better houses,” he said. “If the system is abolished, low-income households will face more difficulties in buying houses.”
His remarks came two days after Won said at a press conference last Tuesday that a series of recent frauds, exploiting the jeonse system have shown that the traditional renting method is not valid anymore. In particular, the land minister mentioned the idea of placing deposits in escrow accounts, drawing a backlash from landlords and real estate market experts.
“For landlords, the purpose of jeonse is to make use of deposits,” said Korea Research Institute for Construction Policy researcher Lee Eun-hyung. “Tenants are still able to get their deposits back through the insurance system, so additional regulations are unnecessary.”
During the press conference, the LH chief also remained cautious about accepting requests from future residents of the collapsed apartment complex in Incheon to rebuild it from scratch. LH is the construction project's owner, and GS E&C, which is in charge of building the apartment complex, admitted it had not properly installed rebar in over 30 places of the destroyed underground parking lot's upper floor.
“It is not appropriate to talk about reconstruction until the results of the safety inspection come out,” he said.
He also emphasized that LH will sell a combined 15 trillion won ($11 billion) worth of properties nationwide by 2026 to reduce the company's debt-to-equity ratio below 200 percent.