According to information received from officials, more than a billion dollars is lost to jeonse scams consistently
South Korean rental estate market includes a novel framework known as ‘jeonse’ in which the occupants pay a huge sum of deposits- sometimes it would be hundreds of dollars- and then would be able to live rent-free for a long time, prior to getting their cash back when they move out. The main intention behind such a system is that the landowners gain access to interest-free cash for speculation, and the occupants get free lodging, with the property as insurance.
But the problem is that the whole system is presently being misrepresented and filled with fraud. According to information received from officials, more than a billion dollars is lost to jeonse scams consistently.
Park Hyeon-su who lived in a windowless micro-apartment, worked double shifts, and saved money for a home got scammed, draining him of decades worth of hard-earned money. Park’s story presents the reality of hundreds of people who were robbed similarly.
Park told AFP that he regularly worked 9.00 am – 12 pm in small delivery-related jobs to save up to $73,000. After Park had paid and moved in, he realized that the supposed landowner did not have the authority to lease the property. The landowner then vanished, leaving Park who was later evicted.
It was not just cash, he told AFP, however “my whole 20s and mid-30s” that was taken, and keeping in mind that legal procedures are continuing, he is highly doubtful about receiving compensation.
“My dream of owning a home has vanished, and I’ve given up on dating, not to mention getting married or having a child,” said Park, 37.
Official information demonstrates no less than 17,000 individuals like Park – – around 70% of victims in their 20s and 30s – – have been hit by jeonse scam lately. Also, activists say authorities are not doing what’s necessary to help the victims or rebuff fraudsters, who frequently figure out how to stow away and keep the cash. The greatest sentence for fraud in the South is 15 years in prison.
Increasing Suicide Rates
No less than eight jeonse scam casualties have committed suicide, activists say. A large number take bank loans to cover the gigantic jeonse costs, in the hope that they will receive the money back when they move out. Yet, after they’ve been defrauded, they still have to pay back to the bank.
South Korea‘s parliament passed an exceptional bill last year aimed at aiding the victims, with the Financial Services Commission offering interest-free credits that can be reimbursed inside as long as 20 years.
In any case, jeonse fraud victims say they shouldn’t need to reimburse the stolen bank loans except if authorities get their deposits back from the fraudsters.
The other choice is to look for debt rehabilitation, which is a comparative cycle to insolvency and wipes out some obligation, yet affects FICO ratings and is especially harmful to youngsters, activists say.
A long time back, Choi Jee-su, 33, utilized his life savings along with bank loans to move into a jeonse loft to get away from life in a cockroach-infested apartment. However, his loft was sold free from him, and the property manager disappeared with his money, leaving him burdened with obligations. To repay his bank loan, Choi took other high-interest credits and sold off his stocks, worked extra hours in cafés, and lived on modest food to set aside money.
The opposition Democratic Party has proposed a bill permitting the state to repay occupants for stores lost to extortion. However, the public authority has pushed back referring to cost concerns, with Land Pastor Park Sang-charm saying that youthful occupants might have been “messing around” when they marked the agreements. The National Assembly will decide on the bill on May 28.