HF Launches Special Jeonse Deposit Refund Guarantee for Landlords Amid Lowering Jeonse Prices

- Landlords can sign up for the Special Refund Guarantee to protect their next tenants from the risk of not having their jeonse deposit refunded

Korea Housing Finance Corporation (HF, CEO Choi Joon-Woo) announced on August 31, 2023, that it is launching a special security deposit refund guarantee (“Special Refund Guarantee”). This guarantee is designed to aid landlords in returning the security deposits of subsequent tenants in their homes financed through loans taken under the eased DSR limit*. This July, HF also rolled out a special refund guarantee product dedicated to incoming tenants, ensuring the safe refund of their security deposits as part of its efforts to address the challenges faced by tenants and landlords due to lower joense prices. 

 * A temporary reduction in the debt service ratio cap for home loan applicants who intend to utilize the loan to refund their tenants’ security deposits (July 27, 2023 through July 31, 2024)

Landlords with a jeonse refund loan under the eased DSR cap are required to sign up for the Special Refund Guarantee product provided by one of the accredited organizations (HF, HUG, SGI) and pay a guarantee fee. This guarantee product is applicable only to leases that commence up to September 30, 2025, under the temporarily relaxed DSR regulation. In cases where a landlord fails to return the deposit without valid cause at the conclusion of the lease term, the tenant of a property covered by this refund guarantee can expect the deposit to be disbursed by the guarantee agency.

Furthermore, while the maximum amount for each HF Special Refund Guarantee remains at KRW 1 billion, the upper cap for each landlord will be raised to KRW 3 billion to provide added protection for tenants engaging in leases with landlords of multiple properties. The Special Refund Guarantee is offered by all three guarantee institutions of HF, HUG, SGI and will also become available at trusted financial institutions, including commercial banks, consecutively once the related IT setup and other necessary preparations are finalized.

 * Applications for HUG Special Refund Guarantee to be submitted online or at its branches and designated financial institutions, while those for SGI Special Refund Guarantee to be accepted exclusively at its branches

An HF official said, “Enabling landlords to apply for the Special Refund Guarantee, previously available only for incoming tenants whose jeonse price has decreased compared to the outgoing tenant, will ease the burden on new tenants and assist landlords in meeting the requirement for the special safety deposit refund program.”

※ Reference

1. How to Sign Up for the HF Special Refund Guarantee Available for Security Deposit Return Loans

2. Q&A