HUG retrieves only 9.7% in jeonse deposit it pays on behalf of landlords

It was found that the Korea Housing & Urban Guarantee Corporation (HUG) paid 1.7143 trillion won in jeonse deposits instead of homeowners not paying back repetitively with bad intentions. Only 167.4 billion won was returned, with a recovery rate of 9.7 percent. Critics point out that ill-intentioned landlords capitalize on the jeonse guarantee system as a tool to amass assets illegally. At the same time, the government spends taxpayers’ money to make up for the loss that the HUG sustains.

According to a status report on the jeonse deposit repayment guarantee system and payments by subrogation submitted on Wednesday by the HUG to Democratic Party (DP) lawmaker Hong Gi-won, a member of the National Assembly Land Infrastructure and Transport Committee, the total amount of jeonse deposit money that the HUG paid on behalf of homeowners maliciously dodging their responsibilities for paying back amounted to 1.7143 trillion won as of August. Instead of landlords owning 10 houses and above, the HUG repaid a whopping 1.486 trillion won, but only 7.9 percent, or 117.1 billion won, was recovered.

With jeonse scams increasing, the HUG has seen a soaring amount of jeonse deposits that it repays but recovered only a portion of the paid money. Consequently, the HUG is expected to suffer a net loss of 3.4 trillion won this year.

"In effect, the public sector is forced to bear the burden of paying back jeonse deposits that homeowners are supposed to deal with,” said Professor Lee Chang-moo of the Urban Planning Department at Hanyang University. “The current jeonse guarantee program needs to be fixed urgently.”