[2026 Parliamentary Audit] Choi Inho, HUG President: "Safe Trust guarantees returns in the 4% range... HUG's own funds to cover losses in case of an accident"

"Room to guarantee annual returns of 4.4% to 5%
Only 0.3% of PF incidents led to subrogation payments
HUG can cover losses from PF incidents
Blocks gap investment, aligns with government policy"

Choi Inho, president of the Korea Housing & Urban Guarantee Corporation (HUG), said the Jeonwolse Safe Trust could guarantee a fixed annual return of 4% and posed little risk of investment principal being impaired. Under the trust, HUG manages tenants' jeonse deposits and pays landlords a fixed return.

At the Ministry of Land, Infrastructure and Transport's parliamentary audit on the 15th, Choi was asked by Kang Deukgu of the Democratic Party of Korea whether returns could be generated through a project financing (PF) loan fund. He replied, "PF interest rates are currently 5% per year," adding, "There is sufficient room to guarantee returns of 4.4% to 5%."

Choi Inho, president of the Korea Housing & Urban Guarantee Corporation, answers lawmakers' questions about the real estate market and housing guarantees during a parliamentary audit held by the National Assembly's Land, Infrastructure and Transport Committee on the 15th. Yonhap News Agency

Under HUG's Jeonwolse Safe Trust, landlords' deposits are lent to projects backed by HUG's PF guarantees, and landlords receive monthly interest income of 4% to 5% per year. Tenants can get their jeonse deposits back safely, while landlords can secure stable monthly income without converting jeonse leases to monthly rentals.

At the audit that day, concerns were raised that investments could be lost if PF projects in which HUG invests the deposits were delayed due to unsold units or rising construction costs. In response, Choi said, "Because HUG invests in projects for which it has provided PF loan guarantees, it can cover any losses with its own funds if an accident occurs." He added, "Since 2003, we have provided more than 50 trillion won in guarantees, but only about 0.3% of cases have resulted in subrogation payments. We will uphold the principle that the investment principal must never be impaired."

Some also argued that the Jeonwolse Safe Trust runs counter to the government's policy direction on jeonse. Kim Jeongjae of the People Power Party said, "Since the Lee Jaemyung administration took office, jeonse has been disappearing because of policies that encourage owner-occupancy and prohibit conditional jeonse loans. HUG's Jeonwolse Safe Trust, by contrast, is a policy that encourages the jeonse system and therefore runs counter to the government's policy direction."

Choi responded, "The trust aligns with the government's policy direction in that it discourages gap investment," adding that it is "a highly beneficial system for tenants who prefer jeonse." Since HUG holds the deposits in trust, the system can prevent gap investment, in which buyers use jeonse deposits as leverage to purchase real estate.

In response to concerns that landlords would have little incentive to participate if the fixed return were lower than the monthly-rent conversion rate, HUG said it would encourage participation through tax benefits.

Kim Youngguk, director general of the Ministry of Land, Infrastructure and Transport's Housing and Land Office, who attended the parliamentary audit that day, said, "We are consulting with relevant ministries on tax benefits, housing pensions, and exemptions from owner-occupancy requirements to increase landlords' incentives to participate." He added, "We plan to announce the details once consultations are complete."

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