Unreturned tenant deposits surged to 1.65 trillion won last year

Tenant deposits not returned by rental business operators who signed up for housing rental guarantee insurance exceeded 1.65 trillion won last year. The value of guaranteed accidents for rental operators has increased more than 40 times compared to three years ago.

According to the Housing and Urban Guarantee Corporation (HUG) on Feb 18, the combined value of rental guarantee-related loss last year was 1.6537 trillion won. A rental guarantee is a service in which HUG repays the deposit if the rental business operator does not return the deposit. As of 2021, the amount of unpaid rental guarantee amounted to 40.9 billion won, which increased to 83.1 billion won in 2022 and jumped to 1 trillion won in 2023.

Last year, 80% (1.3229 trillion won) of losses were related to guarantees by private rental business operators. The value of accidents caused by corporate rental business operators amounted to 330.8 billion won or 20% of the total. This is a 1.4-fold increase compared to the previous year (138.7 billion won).

The rapid increase in loss amount is due to a policy change requiring mandatory rental guarantee subscription in August 2020, increasing the number of subscriptions. The number of houses subscribed to rental guarantees, around 160,000 in 2019 before the mandate, more than doubled to about 340,000 last year. Most houses rental operators own are non-apartments, such as villas, officetels, or studio apartments. As demand for non-apartment rentals plummeted after a recent rent scam, the number of cases where rental operators failed to return existing tenants' deposits timely increased rapidly.


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