HUG jeonse-monthly rent safety trust center opens
Handles consultations, applications, agreements and follow-up
'Cooperation with related agencies key,' vice minister says
A new program that places tenants' jeonse deposits under the management of a public institution while paying landlords a stable monthly income has officially launched.
Kim I-tak, first vice minister of the Ministry of Land, Infrastructure and Transport, spoke Tuesday at the launch ceremony for the Korea Housing and Urban Guarantee Corporation (HUG) Jeonse and Monthly Rent Safety Trust Center in Yeouido, Seoul. "As the housing cost burden on ordinary people grows, responding to market changes is a task for the government," he said, adding that the new body "goes beyond simply holding deposits — it is the starting point of an advanced residential virtuous-cycle model that can provide a stable lease environment and also promote housing supply."
The center, which opened Tuesday, serves as the front-line window for the jeonse and monthly rent safety trust program. It guides landlords and tenants who wish to participate, handles tailored consultations, applications and agreement signings, and takes responsibility for follow-up management. The return of deposits at the end of a lease term will also be processed through the center.
Under the program, HUG, the landlord and the tenant enter into a three-way agreement under which HUG manages the tenant's jeonse deposit directly. Having a public institution hold the deposit is intended to reduce concerns about non-repayment. The pooled deposits flow into a "housing supply activation fund," which is then invested in project financing (PF) sites guaranteed by HUG. Landlords receive a fixed monthly payment drawn from the fund's returns.
HUG has set an assumed annual return of 4.35 percent for the program. Under this structure, a landlord who entrusts a jeonse deposit of 300 million won ($217,000) would receive about 1.09 million won per month. HUG says the arrangement allows landlords to secure a steady income while reducing the risks of rent arrears and vacancies.
The launch ceremony was attended by Vice Minister Kim and HUG President Choi In-ho, along with representatives from related organizations including Korea Association of Realtors Chairman Kim Jong-ho, Korea Housing Builders Association Chairman Kim Sung-eun and Korea Financial Investment Association Executive Director Lee Hwan-tae. HUG plans to sign an MOU with the Korea Association of Realtors on Sept. 30 regarding the program.
"Because the jeonse and monthly rent safety trust program operates differently from conventional lease contracts, cooperation with related agencies is essential for it to take hold," Vice Minister Kim said. "The Ministry of Land, Infrastructure and Transport will listen closely to voices from the field and spare no institutional or administrative support."
Korea Housing Builders Association Chairman Kim Sung-eun said that if the fund supplies capital to PF project sites, "it will give breathing room to the stagnant private housing construction sector and serve as an opportunity to increase the supply of quality housing." He added that the association would "cooperate closely with HUG and the government to expand the supply of rental housing and contribute the wisdom of the field without reservation."
HUG President Choi said the corporation would "do its utmost to ensure the program takes root quickly so that HUG can grow into a platform institution that comprehensively supports residential finance and housing supply," and pledged to use the center as a hub to "fully resolve the questions of citizens who seek housing stability."
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