Gov't to enact special law to support housing scam victims

Minister of Land, Infrastructure and Transport Won Hee-ryong, second from left, speaks during a press conference held at the government complex in central Seoul, Thursday. Yonhap

Aggravated punishment to be applied for jeonse scammers

By Anna J. Park

Amid increasing calls for strengthened protection of housing rental tenants from malicious scams, the government has decided to redress financial damages borne by “jeonse” fraud victims through the enactment of a special law.

Jeonse is Korea's unique lump sum housing rental system that requires tenants to pay some 50 to 90 percent of a rental house's market value at the start of a lease contract. While the jeonse deposit should be returned to tenants at the end of the lease, there has recently been a spike in cases of massive collective jeonse fraud, affecting thousands of tenants, driving some of the victims to suicide out of desperation.

Against the backdrop, relevant government bodies, including land, finance, administration and welfare-related ministries, have announced a set of measures on Thursday to support jeonse victims.

According to the measures, jeonse scam victims will be given priority to purchase the house that they are residing in at the same price as the winning bid, when the residence is auctioned after being repossessed. If the victim elects to purchase the property, they can borrow the amount they need at a low-interest rate, ranging from 1.85 percent to 2.7 percent a year with a maximum maturity of 30 years. If they do not elect to purchase, the Korea Land & Housing Corporation (LH) will have the option to purchase it and then lease it to the jeonse victim. If the LH fails to purchase the residence, jeonse fraud victims will be provided public rental housing nearby.

Jeonse fraud victims stage protests in front of the National Assembly in Seoul, Wednesday. They urge the parliament to enact a special law to redress the victims' damages. Yonhap

The special law will be enforced for a limited period of two years, given that most housing lease contracts' terms are two years. It will be applied only to those whose fraud cases meet the special law's requirements such as the deemed intention of fraud.

The government also plans to provide monthly assistance to victim households, as they are categorized as subject to disaster emergency welfare support. Their due payment of local taxes will be extended by a year.

Those whose houses were already auctioned off before the application of the special law will qualify for public rental housing and receive monthly emergency welfare assistance, as well as credit loans.

In addition to the enactment of the special law, the government plans to revise laws on economic crimes to apply harsher punishment to jeonse scammers.