Jeonse Fraud: A Housing Crisis in South Korea and the Path Forward

South Korea’s unique Jeonse housing system, designed to benefit both tenants and landlords, is under threat by a wave of sophisticated real estate scams, breeding mistrust and impacting society, particularly the younger generation. The surge in fraud cases has exposed significant flaws in the Jeonse system, demonstrating the vulnerability of tenants and threatening a system that millions rely on for housing​. It’s time for South Korea to address this growing crisis urgently by enacting protective measures, increasing transparency, and restoring faith in the housing system.

The Jeonse system, which allows tenants to live rent-free while landlords can use large deposits for financial activities, is an integral part of South Korea’s housing landscape. However, the system’s unique structure has provided a ripe environment for fraud, with cases such as the “villa king” and “villa god” scams inciting widespread fear, particularly among young people who previously preferred Jeonse due to the lack of monthly rents​.This fear, now coined as “jeonsephobia,” has led to a shift in housing preferences with more people opting for monthly rent options, even if it means cutting back on expenses​.

The housing system in South Korea, known as jeonse, is a unique model where tenants typically deposit between 60 to 80% of the property’s value as part of a two-year contract. This system allows tenants to live rent-free while landlords use the large deposits for various financial activities​1​…