Landlords to Earn 5% Annual Returns by Entrusting Jeonse Deposits... HUG to Recruit 'Jeonse and Monthly Rent Safe Trust' Participants from September

Creation of Housing Supply Activation Fund

Fixed Monthly Returns Paid from PF Loan Interest

Priority Given to Homes Valued at 2 Billion Won or Less

Aimed at Preventing the Shift from Jeonse to Monthly Rent and Curbing Jeonse Fraud

The "Jeonse and Monthly Rent Safe Trust" system, under which jeonse deposits are managed and operated not by the landlord but by the Jeonse and Monthly Rent Stabilization Organization under the Korea Housing & Urban Guarantee Corporation (HUG), will be implemented, with participant recruitment set to begin next month. The intention is to provide landlords with annual fixed returns of 4–5% by using their deposits to issue PF (project financing) loans, generating interest income, and to protect tenants from jeonse fraud risks.

On August 20, the Ministry of Land, Infrastructure and Transport announced that the Jeonse and Monthly Rent Safe Trust program would be pursued as a follow-up measure to the 8.13 housing supply plan.

This program is structured as a three-party lease agreement between the stabilization organization, the landlord, and the tenant. The tenant deposits the jeonse amount with the stabilization organization, which is under HUG, and the funds are entrusted for management. Investment income is paid out to the landlord every month. At the end of the contract, the stabilization organization is responsible for returning the tenant's jeonse deposit.

HUG plans to create a "housing supply activation fund" using the deposits entrusted by landlords and will operate the deposited assets. Through this fund, HUG will provide loans to residential project operators registered in HUG's guaranteed PF products, in place of financial institutions, and the interest accrued will be returned to the landlord. However, to prevent jeonse-related accidents for tenants, only full deposits are permitted; applications involving only partial deposits will not be allowed.

The government and HUG expect that the interest income from PF loans will enable monthly fixed payments of 4–5% per year to landlords. There are also plans to offer tax benefits on the landlords' income. In particular, if participating landlords relocate from regulated areas in the Seoul metropolitan region to non-regulated areas, they can receive an additional home pension of around 1–3% per year on top of the Safe Trust income. If a registered landlord participates in the program, the requirement to subscribe to lease deposit protection can be waived.

The Ministry of Land, Infrastructure and Transport will begin accepting applications for the program in October, following a public announcement at the end of September. There will be two parallel approaches: landlords may apply directly and receive support in recruiting tenants from the stabilization organization, or landlords and tenants may agree in advance on the jeonse amount before filing a joint application. The program is open to all residential property types and will support separate solicitations for both landlords and tenants. However, the program will be prioritized for homes with a market value of 2 billion won or less. There will also be a basic screening process to determine whether the jeonse amount is excessively high compared to the property value. Sequential tenant move-ins will begin at the end of this year, and 500 units from the Korea Land & Housing Corporation (LH)'s purchased rental housing will be included as a pilot project.

The government expects the Jeonse and Monthly Rent Safe Trust program to contribute to housing market stabilization. By helping elderly and retired landlords generate steady income, the initiative aims to prevent the shift from jeonse to monthly rent. For tenants, the interest rate for jeonse loans (3–4%) is lower than the current conversion rate between jeonse and monthly rent (5–6%), enabling them to reduce their fixed housing costs by remaining in jeonse properties. Moreover, the system is expected to prevent incidents where jeonse deposits are not returned.

Kim Itak, First Vice Minister of the Ministry of Land, Infrastructure and Transport, said, "Tenants can avoid the risk of losing their jeonse deposit, and landlords can be free from the risk of missed monthly rent payments, allowing both parties to enter lease agreements with peace of mind. If the program proves successful, we will consider not only the current approach—where tenants enjoy the benefits of jeonse and landlords secure monthly rent income—but also new contract models to further promote a healthy rental market."

This content was produced with the assistance of AI translation services.