1. introduction: The structural vulnerabilities of the Jeonse system and the nature of the crisis
in South Korea's residential rental market, the "Jeonse" system is a unique form of housing that has served as a means of interest-free private financing for landlords and a housing ladder through forced savings for renters. However, the decline in real estate prices and interest rate hikes that began in earnest in the second half of 2022 have elevated the inherent risks of the Jeonse system - "Ggangtong Jeonse" and the organized "Jeonse fraud" that exploits it - to the level of a social disaster.
based on data on charter fraud losses accumulated up to 2025, this report reveals that the type of fraud is a systemic crime that goes beyond mere individual aberrations. it analyzes the high concentration of victims, especially among young people, and delves into the government's policy roadmap to be implemented by 2026, particularly the expansion of financial information linkage systems and the institutionalization of prevention education. it also provides a legal analysis of how to utilize the 'special terms and conditions' and the 'safe rental' system, which are the strongest defenses available to renters under current laws.
2. demographic Analysis of Rental Fraud Victims and the Youth Housing Crisis
while rental fraud spans all generations, the data shows that the crisis is clearly hitting young adults. this should be interpreted as a national economic crisis in that it deprives people at the beginning of their careers of the opportunity to build assets.
2.1 Generational skewness of victims
according to statistics from the Ministry of Land, Infrastructure, and Transport and related research institutes, the overwhelming majority of victims of charter scams are concentrated in the 2030 generation.
share of victims in the 2030 generation: as of 2025, about 75% of charter fraud victims were in their 20s and 30s. specifically, those in their 30s account for 48.4%, followed by those in their 20s at 25.8%.
social implications: generation 2030 is entering the workforce after college, forming independent households or becoming newlyweds through marriage. they are relatively inexperienced in housing transactions and have structural limitations that make them vulnerable to solicitations from real estate agents or landlords in situations of information asymmetry. according to the Ministry of Land, Infrastructure, and Transport's survey (November 30, 2024), 74.3% of young adults (20s and 30s) were affected, suggesting that the housing stability of young adults is seriously threatened.
2.2 Vulnerability analysis by housing type
when analyzing the types of housing that were damaged, it can be seen that they are concentrated in the non-apartment sector, where it is difficult to identify market prices compared to apartments.
housing Typenumber of determined damages (estimated)structural vulnerability analysis multi-family dwellings (villas) 7,275
individual units are registered, but in the case of new construction, it is difficult to calculate accurate sales prices, making it easy to manipulate the rental rate (ratio of sales price to rental price).
offices 4,948
high demand from young, single-person households at the interface of residential and business use, but high risk of subletting in high-density developments.
multifamily 4,317
since the entire building is owned by a single person, it is essential to check the seniority of the security deposit, but it is common for junior tenants to be deceived by concealing it.
in addition, a high proportion of neighborhood living facilities (commercial houses) and multi-living facilities (such as high schools) are illegally converted and rented out for residential use, and these illegal buildings are in a blind spot where it is impossible to sign up for a rental deposit return guarantee, essentially blocking damage recovery.
3. analyzing the evolution and mechanisms of rental fraud
rental fraud is not just a default. it is an intelligent crime that combines legal loopholes, information asymmetries, and the involvement of facilitators (such as intermediaries). we analyze the main types of fraud identified in 2025 to provide a starting point for prevention.
3.1 The Trust Fraud (The Trust Real Estate Fraud)
the trust fraud is a typical scheme that exploits the complexity of the real estate trust system to defraud tenants.
mechanism: The landlord (trustee) transfers ownership to the trust company (trustee) and arbitrarily enters into a lease agreement with the tenant without the trust company's consent. the landlord reassures the tenant that he or she is the beneficial owner, despite the fact that the "ownership" field in the land register shows a trust relationship.
legal risks: under trust law, once the trust is registered, the internal and external ownership belongs to the trust company. without the trust's consent, the lease is void and the tenant becomes a 'squatter'. you have no legal right to get your deposit back, and in the worst case scenario, you could be sued for libel and evicted.
reasons for failure to verify: The general certificate of registration (full certificate of registration) only records the fact of the trust, but the 'trust book' containing the specific rights (such as the right to rent) must be issued separately to verify. many tenants are harmed by not checking this trust book.
3.2 Concurrent Proceedings and Senior Subordinate Mortgages (The "Midnight Gap")
this is a classic but deadly tactic that exploits the time difference in a tenant's ability to mount a counterclaim.
thetime difference attack: Even if the tenant pays the balance and receives the move-in notice and confirmation date, under the Residential Tenancy Act, resistance starts at "zero o'clock the next day. fraudsters exploit this to execute a mortgage or change ownership on the "same day" the tenant moves out.
the result: the bank's registration of the mortgage becomes effective on the day of filing (daytime), while the tenant's counterclaim is triggered at 0:00 the next day, relegating the tenant to a junior position. in the event of an auction, the bank will receive the dividend first, and the lessee is at risk of losing the entire deposit.
3.3 Collusion and price manipulation of real estate brokers
this is a case where a trusted intermediary is part of a fraudulent scheme, exacerbating information asymmetry.
concealment of senior security deposits: In the case of multifamily housing, a real estate agent may misrepresent the total amount of security deposits (senior security deposits) of other tenants in the building to create a false sense of security. for example, they may say that the senior security deposit is only KRW 900 million when the actual senior security deposit is KRW 1.2 billion, misleading the tenant into thinking that the deposit is recoverable.
up-writing: taking advantage of the fact that it is difficult to determine the market price of newly built villas due to the lack of transactions. the broker claims that "the market price is KRW 4 billion, so the rental price of KRW 2.7 billion is safe because it is 70% of the market price," but the actual auction valuation is only KRW 3.2 billion, resulting in a canned rental. this is an active deception that clouds the tenant's judgment.
3.4 Paper Landlords and Nominee Rentals
this is a trick to change the landlord immediately after signing the contract.
name change: Shortly after signing the lease and paying the balance, the landlord sells the property to a "pantser" (homeless, bad credit, etc.). the new landlord is completely incapable of returning the deposit, and the old landlord takes the deposit and disappears. if the new landlord is a tax-defaulting landlord, the tenant's security deposit is further pushed to the back burner by the tax debt.
4. 2025-2026 Government Policy Roadmap and Institutional Response
the government is rolling out a phased policy roadmap through 2026 to stop the spread of rental fraud and build a prevention system. these policies are shifting the paradigm from reactive support to 'proactive prevention' and 'systemic blocking'.
4.1 Expanding the use of confirmation date information linkage systems across the financial sector (2026 target)
the most important policy change in 2026 is to link all financial institutions, including online specialized banks, to the confirmation date information system.
background: Previously, it was difficult for commercial banks to check the real-time status of the granting of the finalization date during loan screening, limiting their ability to prevent "simultaneous progress" fraud.
what: The Ministry of Land, Infrastructure, and Transport and the Korea Real Estate Agency will sign business agreements with internet banks and local banks with a high proportion of young people, such as Kakao Bank, Toshiba Bank, and iM Bank (Daegu Bank), to establish a system to share confirmation date information in real time starting in 2025.
expected effects: when the system is fully implemented from 2026, when a landlord applies for a mortgage, the banking system will automatically query the information on the tenant confirmation date of the house. if a senior tenant is identified, the loan will be denied or the loan limit will be reduced, eliminating fraudulent schemes to place a senior mortgage without the tenant's knowledge.
4.2 Establish an infrastructure for 'on-the-ground' prevention education and counseling for young adults
recognizing that even young adults with high access to digital information lack knowledge of real estate law, offline education will be greatly enhanced.
university-based education: starting in 2025, we will conduct "outreach" charter fraud prevention education centered on universities with a high concentration of young adults (Seoul National University, Sungkyunkwan University, etc.) to coincide with the college entrance season (February). this is a program that educates students on global contract precautions and how to write special contracts in conjunction with freshman orientation.
youth Housing Counseling Centers: LH and other public institutions operate 'Visiting Youth Housing Counseling Centers' at youth hubs such as the Seoul Metropolitan Youth Center. these centers provide practical 'safety contract consulting' such as analyzing the rights in the land registry and reviewing the wording of contracts.
regional damage support centers: In areas of concentrated damage, such as Ansan City, MOLIT and HUG have set up a "visiting rental damage support center" in the ward office to provide one-stop legal, psychological, and financial counseling. a home visit service for victims with limited mobility has also been introduced.
4.3 Reorganization of the Rental Deposit Return Guarantee System (126% Rule)
in order to prevent "zero-capital gap investment," the requirements for the HUG (Housing and Urban Guarantee Corporation)'s rental deposit return guarantee will remain strict in 2025.
application of the 126% Rule: The threshold for guarantee subscription has been strengthened from 150% to 126% of the published price. specifically, the percentage of the list price is lowered from 150% to 140%, and the rent-to-value ratio requirement is lowered from 100% to 90%.
market impact: While these measures have the effect of discouraging gap investments by inflating rents, in the non-apartment market, such as villas, the decrease in the posted price has had the side effect of making many units ineligible for the guarantee. our analysis estimates that around 70% of Seoul's townhouse and multifamily rental contracts will not meet the enhanced requirements (112-126%).
security depositsupport: To compensate for this, from 2025, a project to support security deposits for households with a rent deposit of KRW 300 million or less and an annual income of KRW 50 million or less for young adults (KRW 75 million for newlyweds) is being accepted nationwide.
4.4 Advancement of Safe Charter App 3.0
efforts to resolve information asymmetry through mobile apps are also continuing.
registration change notification: 'Safe Sublease App 3.0' is equipped with a function that sends a notification via KakaoTalk when a tenant views the registration register even once, and when there is a change in the registration of the house (owner change, foreclosure, etc.) for the next two and a half years.
bad landlord search: The feature will be enhanced to allow users to search for a list of bad landlords, warranty accident history, and whether they are banned from joining the HUG warranty without the landlord's consent. however, the limited availability of market prices for multifamily housing remains a challenge due to price discrepancies.
5. a Practical Prevention Guide for Renters: Step-by-Step Strategies for Dealing with Leases
despite all the policy measures, the final safety net is the tenant's own diligence and the safeguards in the contract. the following is an essential checklist that reflects market conditions in 2025-2026.
5.1 Due Diligence
find the right price: cross-validate the sale and rental prices of the property by using a safe rental app, MOLIT's real estate disclosure system, and at least two to three neighborhood real estate agencies. if the rental rate exceeds 70-80%, it should be categorized as a risk.
scrutinize the land registry:
title: make sure to check if the owner is a trust. if it is, you should get a copy of the trust register to see who is authorized to rent the property.
egu (rights other than ownership): calculate that the combined amount of the lien and senior security deposit is no more than 70% of the home's market value.
verify tax arrears: Ask the landlord to provide a 'Certificate of Payment of National and Local Taxes'. this is essential as foreclosures due to tax arrears have a higher priority than security deposits.
5.2 Required Special Covenants
in the special covenants section of the lease, you should include the following provisions to protect yourself legally if the landlord refuses to honor them, it's safe to walk away.
special covenant itemsuggested wording and contenteffect and necessity mortgage and warranty insurance "If you are denied a rental loan and warranty insurance due to defects in the landlord or the property, this contract is null and void and your deposit is immediately returned in full."
prevents forfeiture of down payment and provides a secondary verification of the property's safety through a financial institution's inspection.
limit changes in rights "The landlord shall not make any changes to the rights relationship, such as changing ownership or placing a mortgage, until the day after the balance payment date. in case of violation, the contract shall be terminated and damages shall be claimed."
a clause that prevents "midnight gap" attacks before the effective date of the move-in declaration.
tax arrears "The landlord confirms that there are no national and local tax arrears as of the date of signing the contract, and may terminate the contract if such arrears are confirmed before the balance date."
protects against the risk of losing the security deposit due to the priority of tax receivables.
buying and selling during the lease term "If the landlord enters into a purchase and sale agreement during the lease term, the landlord must notify the tenant in advance. if the tenant refuses to accept the succession of the new landlord, the contract shall be terminated and the deposit shall be returned."
a clause to prevent ownership from passing to a "pantser" who has no ability to return the deposit.
5.3 Utilize expert consulting
actively utilize the 'Safe Contract Consulting' supported by the Ministry of Land, Infrastructure, and Transport and HUG. before signing a contract, you can visit a youth housing counseling center or rental damage support center with a copy of the land registry and a draft contract, and experts will analyze your rights and diagnose risk factors in advance.
6. conclusion: challenges and tenant sovereignty for 2026
as of 2025, South Korea's system for preventing rental fraud is in a transitional phase. the statistic that 75% of victims are young adults warns that the problem is more than just a real estate issue and can lead to generational inequality and a decline in social vitality.
the government aims to complete the linking of financial information, including internet banking, by 2026, to create a technological fraud net. until such a system is in place, however, the only defense is for renters to arm themselves with information and thoroughly verify it. "Trusted source verification," "126% rule compliance," "specification of special terms and conditions," and the use of safe charter apps have become essential survival strategies.
the charter industry was built on trust, but that trust must now be replaced with 'verified data'. renters need to be in control of their contracts to protect their deposits, and governments need to deliver on their 2026 policy roadmap to create a transparent rental market without information asymmetries.
appendix: Rental fraud prevention key summary statistics and indicators
categorykey Indicators and Figures main victimization age 30s (48.4%), 20s (25.8%) → 74.3% of young adults most Affected Properties multifamily (7,275), office buildings (4,948), and multifamily (4,317) guarantee subscription threshold 126% of the asking price (140% of the asking price × 90% of the rental rate) safety Margin first lien mortgage + security deposit ≤ 70% of the home's market value policy Support Contacts rental Damage Support Center (1533-8119), Ansan City Counseling Center (031-481-1995)
[Note] This report is based on data as of February 12, 2025, and policy announcements scheduled for 2026. Laws and policies are subject to change, so be sure to consult the latest laws and experts before signing a contract.