전세사기 사태와 주거 불안의 현실

Rental Fraud (전세사기)

Definition: Rental fraud involves landlords deceiving tenants by accepting substantial security deposits without the intention or capability to return them, resulting in widespread victimization across thousands of individuals in South Korea between 2022 and 2023. This crisis emerged due to inherent structural weaknesses in South Korea's unique rental system, "Jeonse" (전세), coupled with a real estate market bubble burst.

Understanding Jeonse

Jeonse is a distinctive rental practice in South Korea where tenants deposit a lump sum (jeonse money) with landlords for occupancy over a fixed period, expecting full repayment upon lease expiration. Unlike monthly rentals, jeonse eliminates monthly payments, benefiting tenants with available capital while allowing landlords to invest funds. However, this system carries significant risk if property values decline or landlords accumulate substantial debt, potentially leading to inability to repay the deposit.

Timeline of the Crisis

The crisis escalated in 2022 and 2023 due to rising interest rates and a downturn in the real estate market, exacerbating "inverted jeonse" scenarios where property values fell below rental deposits. Notably, organized fraud cases surged in areas like Incheon Mihu-gu, Seoul Gangbuk-gu and Gangbuk-gu, and densely populated apartment complexes in the metropolitan area. Common fraudulent tactics included:

• Empty-House Jeonse: When property values plummet below rental deposits, landlords cannot recoup their funds even by selling the property.
• Multi-Collateral Fraud: Landlords secure maximum bank loans against properties, leaving tenants vulnerable as loans take precedence in auctions, leaving tenants with no recourse.
• Malevolent Rental Operators: Accumulating dozens to hundreds of rental units, these operators collect deposits, abscond with funds post-withdrawal, leaving tenants without restitution.

By 2023, reported cases of rental fraud exceeded 20,000, with estimated losses reaching billions of dollars.

Victims

The majority of victims are young adults (20-30 years old), low-income individuals, and those relocating from rural areas, groups with limited housing options. Apartment complexes and non-apartment dwellings like villas and officetels disproportionately suffered, with some victims facing eviction through auctions and even contemplating extreme actions due to lost deposits.

Government Response

In 2023, the South Korean government enacted the "Special Act on Support for Victims of Rental Fraud and Housing Stability," addressing victim recognition, priority purchase rights for affected properties, temporary housing support via LH, and low-interest loans. However, criticisms arose regarding overly restrictive victim eligibility criteria and the absence of direct deposit refunds, prompting ongoing revisions.

Structural Causes and System Reform

The rental fraud crisis stems from inherent vulnerabilities in South Korea's rental framework. Insufficient safeguards like mandatory jeonse guarantee insurance, landlord transparency, and segregated deposit management contributed to the issue. Additionally, lax oversight over non-apartment housing markets and inadequate penalties for organized fraudulent landlords exacerbated the problem.

Future Outlook

Debates on the future of the jeonse system have intensified, with discussions centered around transitioning to monthly rentals or guaranteed deposits, mandatory jeonse insurance, and stricter rental registration requirements. Despite these discussions, the entrenched nature of jeonse as a long-standing housing practice complicates swift reform. Addressing complete victim compensation and preventing recurrence remains a critical focus in South Korea's housing policy agenda.