A front-line service center has opened for a program that places tenants' lease deposits under public management. Kim Yi-tak, first vice minister of land, infrastructure and transport, said the deposit trust program "will become an advanced model for a virtuous cycle in housing that promotes housing supply."
Korea Housing & Urban Guaranty Corporation (HUG) held an opening ceremony for its Lease Deposit Trust Center on the 22nd at the agency's Seoul office in Yeouido, Yeongdeungpo District, Seoul. Attendees included Vice Minister Kim, HUG President Choi In-ho, Korea Housing Builders Association Chairman Kim Sung-eun, Korea Association of Realtors Chairman Kim Jong-ho, and Lee Hwan-tae, head of the asset management division at the Korea Financial Investment Association.
The center will handle everything from program guidance and applications to screening of eligible homes and contract terms, support for signing agreements, and follow-up management including collection of deposits and their return. In the early stages, it plans to focus on tailored consultations by category, covering individual landlords and registered rental business operators, and to reflect user feedback in improving its procedures.
In a congratulatory address, Vice Minister Kim said, "As the shift from jeonse to monthly rent accelerates, housing cost burdens are growing for many people, including young adults and low- and middle-income households." Jeonse refers to a lease paid with a large lump-sum deposit instead of monthly rent. He added, "Lowering housing costs and creating a lease environment where people can feel secure is an important task the government must address." He also said, "The center must become a reliable point of contact that both landlords and tenants can trust," and asked officials to "reflect field feedback that emerges during consultations and contracting in refining the program."
Vice Minister Kim also called for cooperation from the construction, real estate and financial investment industries. He asked the realtors association to explain the program's advantages and safety, and the housing builders association to encourage participation by construction rental business operators. He asked the financial investment association to encourage asset management firms to actively take part in an upcoming public call for managers of a housing supply activation fund.
Choi responded that he would "make the center the front-line point of contact for direct communication with the public." He said, "We will move forward in earnest with the center at the core, covering consultation and applications, verification and contracting, and follow-up management," adding, "We will grow into an institution that comprehensively supports housing finance and housing supply." HUG plans to sign a memorandum of understanding with the realtors association on the 30th of this month for cooperation on the program.
Under the lease deposit trust program, tenants entrust their deposits to HUG, which pays landlords an agreed monthly return and refunds the deposit to the tenant when the lease ends. The pooled deposits are invested alongside private capital in areas such as loans for housing projects to support housing supply.
