Recruitment notice for landlords and tenants to be posted on HUG website soon
Policy forum, launch of dedicated support center among preparations completed
Landlords get stable monthly income; tenants convert monthly rent to jeonse
HUG President Choi In-ho: program offers 'new solution for the lease market'
The Korea Housing and Urban Guarantee Corporation, known as HUG, is moving quickly to launch its jeonse-monthly rent safe trust program, with a public recruitment notice for landlords and tenants set to be posted on the HUG website soon. The initiative is drawing particular attention as the rental market undergoes a rapid shift away from jeonse toward monthly rent — a trend driven by the fallout from widespread jeonse fraud and a growing preference among landlords for monthly rent arrangements.
According to HUG, the corporation has completed all preparatory steps ahead of the program's full rollout, including hosting a policy forum, holding the launch ceremony for its dedicated Jeonse-Monthly Rent Safe Trust Center, and meeting with the Korea Association of Realtors. "The jeonse-monthly rent safe trust is a new residential finance model that provides housing stability for tenants, stable income for landlords, and a smooth housing supply for the market," a HUG official said. "Starting with the recruitment notice, we will work to establish this as a system that both tenants and landlords can trust and use, and ensure it takes firm root in the market."
What is the jeonse-monthly rent safe trust program?
The program is designed to resolve the mismatch between tenants who prefer jeonse and landlords who currently rent on a monthly basis, converting monthly-rent units into jeonse supply. By entering into a lease agreement linked to HUG as a public institution, tenants can live under a jeonse arrangement instead of paying monthly rent, reducing their housing costs. Because a trusted public body directly manages the jeonse deposit, the risk of jeonse fraud is also eliminated. Landlords, meanwhile, benefit from stable monthly income without the worry of rent arrears or vacancy risk.
In short, the program is a new form of lease contract in which a three-way agreement among the landlord, HUG and the tenant captures the advantages of both jeonse and monthly-rent arrangements while eliminating the associated risks. It will be open to general landlords and tenants regardless of housing type, with participants recruited through a separate public application process. The program will initially apply to homes with a market price of 2 billion won ($1.5 million) or less, and each property will undergo basic verification — including whether the jeonse deposit is disproportionately large relative to market value and whether the building has any code violations.
Tenants who join the program can live under a jeonse arrangement at a lower cost than monthly rent, and those who meet income and other eligibility requirements can secure the lump-sum jeonse deposit through the government's Housing and Urban Fund jeonse loan program or commercial bank financing. Because HUG holds the deposit in trust and takes responsibility for returning it at the end of the contract, tenants do not need to purchase separate jeonse deposit return guarantees or jeonse loan guarantees, sparing them additional insurance premium costs.
HUG's preparations have been steadily advancing
After the program was introduced in the government's second-half economic growth strategy in July, HUG moved swiftly to complete all groundwork. On Sept. 16, HUG co-hosted a policy forum on jeonse and monthly rent stabilization in Yeouido, Seoul, together with Democratic Party lawmaker Bok Gi-wang and People Power Party lawmaker Kim Jeong-jae, exploring the tasks and directions needed for the safe trust program to take stable hold in the market.
On Sept. 22, HUG held the launch ceremony for its Jeonse-Monthly Rent Safe Trust Center in Yeouido, Seoul. The center, which oversees all operational aspects of the program, guides interested landlords and tenants through every stage — from consultation, application and intake to contract support and ongoing management.
On Sept. 30, HUG held a field meeting at its Busan headquarters with the Korea Association of Realtors to hear from real estate agents at the center of the lease market and discuss ways to ensure the program's successful establishment. HUG is also conducting educational sessions on the safe trust program through the association's regional chapters nationwide.
Benefits for landlords and tenants
Once the recruitment notice is posted on the HUG website, the process will proceed in the following order: landlord application, a three-way contract among HUG, the landlord and the tenant, tenant move-in and monthly rent payments to the landlord, and return of the deposit upon contract expiration. Participation is entirely voluntary — there is no legal obligation to join.
Under a hypothetical scenario in which a home is valued at 300 million won, the jeonse deposit is set at 200 million won, and the monthly-rent equivalent is 10 million won in deposit plus 740,000 won per month, a tenant using the safe trust program would live under a jeonse arrangement and pay roughly 530,000 won per month in loan interest — borrowing up to 80 percent of the deposit — saving about 200,000 won compared with monthly rent. The tenant would also be exempt from purchasing jeonse deposit return and loan guarantees, avoiding annual insurance premiums of around 340,000 won.
Under the existing monthly-rent arrangement, a landlord receives a deposit of 10 million won and monthly income of 740,000 won but bears the burden of managing rent arrears, vacancies and other landlord responsibilities. Under the safe trust program, the landlord receives a fixed monthly return of 730,000 won — based on a yield of 4.35 percent — with no such management burden, and is also exempt from the mandatory rental deposit guarantee, which costs around 300,000 won per year.
The deposited jeonse funds are invested through a housing supply activation fund into HUG-guaranteed project financing loan projects, structured to minimize principal loss. Even if investment losses occur, tenants' jeonse deposits are fully guaranteed and landlords continue to receive their monthly returns as normal.
"The jeonse-monthly rent safe trust program is an initiative through which HUG — advancing as a public platform institution for housing supply and residential finance — draws on its accumulated experience and expertise to offer a new solution for the lease market," HUG President Choi In-ho said. "We will pursue this with a sense of responsibility to firmly establish it as a new residential support model that the public can trust and choose."
ook967@heraldcorp.com
