Tenants lose savings due to a vintage regime in South Korea

Lee Chol is so concerned that he avoids being between family members and friends when he realizes that he will often not recover a deposit of 210 million South Korean won ($ 163 thousand) from his rented apartment in Seoul, when the lease period ends in November. “I couldn’t sleep at night or focus on my job for months,” said Lee, who borrowed 120 million won to cover part of the deposit.

Authorities found the body of the owner from whom he rented the apartment in a hotel room in October. Police investigations excluded any criminal suspicion or cause of death from suicide, but local media said the man, dubbed the “Villa King” for having more than 1,100 units for rent across Seoul, was in arrears in paying taxes and was being investigated by the authorities for fraud.

Koreans call Tundra small apartments in gloomy five or six-storey buildings “Villa”, which usually lack the facilities in the most elegant and well-equipped residential towers. Lee, 29, who works for a real estate startup, said: “I heard a lot of things like (you had to investigate it thoroughly). realistically, I don’t think I’ll solve all the problems by November, when the deposit is over. “

Under a unique system in South Korea, landlords receive a deposit from tenants named “jeonse”, equivalent to 50% to 90% of the value of the property at the beginning of the lease period, which typically has a period of two years. Tenants usually pay no rent throughout the period, while their landlord makes profits by investing the money, usually by buying or building more apartments. The contract requires landlords to refund the deposit at the end of the lease period.

Historians traced the roots of the principle of “Chonse” back to the 1800s, but it was not until the 1970s that South Koreans turned to cities as the country turned to manufacturing activity. Chunse continues to be in operation today as mortgages are not affordable for many.