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| Protesters hold up a sign calling for measures for victims of a series of home rental scams under the country's "jeonse" housing rental system during a protest rally in front of the National Assembly building in Seoul, May 23. Yonhap |
The National Assembly on Thursday passed a special bill aimed at assisting victims of a series of home rental scams, including offering them interest-free and low-interest loans.
The revision was approved in a 243-5 vote with 24 abstentions, as rival parties agreed to provide support measures for the victims of a series of massive frauds abusing the country's unique rental system, called "jeonse."
Under the bill, the government will provide interest-free loans to affected tenants for up to 10 years for the portion of the deposits they made. These loans will cover the amount that tenants are entitled to before other priority creditors, such as financial institutions, when the properties they reside in are put up for auction or public sale.
The ceiling amount for the loans will be 55 million won ($41,500) for properties located in Seoul and will vary in other parts of the country. Loans at low interest rates between 1.2 and 2.1 percent will be available for amounts exceeding the limit.
A series of fraud cases involved alleged suspects renting highly collateralized homes to victims for deposits worth tens of millions of won. These homes were later auctioned off due to the suspects' failure to repay debts to financial institutions, resulting in victims facing eviction without receiving their deposits back.
The special bill targets victims whose deposits do not exceed 500 million won, and the limit on surface of the property has been lifted.
Tenants residing in properties purchased through an unconventional method called "gap investment" are also covered by the bill. These real estate transactions typically involve deposits equivalent to around 90 percent of a property's value.
The bill also includes tenants residing in commercial facilities, as well as others who signed up for jeonse under double contracts.
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| Protesters hold up a sign calling for measures for victims of a series of home rental scams under the country's "jeonse" housing rental system during a protest rally in front of the National Assembly building in Seoul, May 23. Yonhap |
Additionally, the bill includes the Korea Housing and Urban Guarantee Co. covering 70 percent of the legal fees incurred by tenants attempting to purchase homes that were auctioned off or sold publicly.
The bill also includes reducing local taxes when the victimized tenants purchase homes.
Jeonse fraud victims who have not received their deposits back and ultimately failed to repay loans to banks can be eligible for interest-free loans for up to 20 years, preventing them from being declared defaulters.
At least four victims, in their 20s and 30s, of the frauds were found dead. The last victim, a woman in her 30s, was found dead in an apparent suicide in western Seoul. She had reportedly been defrauded out of her jeonse deposit by a notorious rental scammer, who had owned 1,139 multifamily housing units in western Seoul but died last October without paying deposits to their tenants.
Under jeonse, tenants give their landlord a large upfront deposit instead of paying monthly rent. The landlord then earns interest off the deposit and returns the deposit at the end of the lease.
The bill is expected to be promulgated through the Cabinet next week and take effect early next month.
The special bill will be enforced temporarily for two years and will be subject to extension upon bipartisan agreement every six months. (Yonhap)
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