Stricter jeonse loan regulations will be imposed starting from Friday, the nation’s financial regulator said Wednesday, adding more pressure on the real estate market as it already faces a series of measures set to curb soaring housing prices.

The latest version restricts jeonse loan guarantees and bans loan requests by buyers who already own a house in high speculation areas. 

The move came in line with the 21st set of housing price regulations imposed under the Moon Jae-in administration on June 17, which put the brakes on the speculative buying of houses through stricter lending rules. 

Jeonse is a home lease system unique to Korea whereby tenants pay a lump-sum deposit instead of monthly rent. To purchase houses, jeonse tenants can borrow money from local lenders against their jeonse deposit. In this case, loan guarantees offered by public issuers, including the Korea Housing Finance Corporation and Korea Housing and Urban Guarantee Corporation, must be submitted. 

Starting Friday, nonhomeowners who attempt to buy apartments priced at 300 million won ($251,000) or higher by using the local banks’ jeonse loans in the “speculative areas” as well as “overheated speculative zones,” where the surge in housing prices doubles the inflation rate, will face restrictions when applying for jeonse loan guarantees, according to the FSC.

The authority expanded the range of regulations. Under current real estate policies, non-home-owning buyers of houses worth 900 million won or more have been subject to limits on receiving jeonse loan guarantees.

In addition, the FSC will promptly retrieve mortgage payments that homebuyers receive from local banks after July 10 and use them to buy apartments worth 300 million won or more, located in such special regulation zones as Seoul and the surrounding metropolitan regions, officials said.


By Choi Jae-hee (cjh@heraldcorp.com)