parliament-rental scam bill

Parliament passes revision bill aimed at supporting home rental scam victims

By Kim Han-joo

SEOUL, April 27 (Yonhap) -- The National Assembly on Thursday passed a revision bill that aims to give priority to victims of home rental scams in recouping their security deposits before local taxes are collected when their rented homes are put up for auction.

The revision was approved in a plenary session, as rival parties have agreed to swiftly come up with realistic support measures for the victims, mostly in their 20s and 30s, of a series of massive frauds abusing the country's unique rental system, called "jeonse."

The central and the regional governments currently have the right to collect taxes imposed on landlords first when their landlords failed to repay debt on their highly collateralized properties that end up for auction.

Under the revision to the local tax legislation, however, the tenants who were victimized in scams will have priority to recoup their deposits before the regional government collects overdue local taxes.

Earlier, the rival parties also passed the revision to the relevant law that gives such tenants priority to recoup their deposits before the central government collects real estate holding tax, inheritance tax and gift tax.

Under a series of fraud cases across the country, alleged suspects rented highly collateralized homes to the victims for deposits worth tens of millions of won. The homes ended up being put up for auction, as they failed to repay debts to financial institutions, leading to victims facing eviction without getting their deposits back.

A separate special bill aimed at helping the victims, meanwhile, is expected to be passed through the parliament next month.

The envisioned bill is designed to give rental scam victims the priority right to purchase the affected homes that end up being put up for auction, as well as providing them with low-interest loans.

Under jeonse, tenants give their landlord a large upfront deposit worth as much as 90 percent of the home's value instead of paying monthly rent. Then, the landlord earns interest off the deposit and returns the deposit at the end of the lease.

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