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For a decade, Park Hyeon-su lived in a windowless micro-apartment in Seoul, working double shifts and saving every penny for a down payment on a nice house. Then real estate scammers took his money.
South Korea’s rental housing market has a unique system known as “jeonse” in which tenants pay huge deposits — sometimes hundreds of thousands of dollars — and then live rent-free for years, before getting all their money back when they move out. .
The idea is that landlords have access to interest-free cash for speculation and tenants get free housing, with the property as collateral. But the system is now riddled with fraud — police figures suggest more than a billion dollars are lost each year to fraud.
The scheme once accounted for two-thirds of the rental market in the 1990s, but has declined in popularity, partly due to growing awareness of the risks.
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Park told AFP he often worked from 9:00 a.m. to midnight on delivery-related jobs to save $73,000. But after he paid a down payment and moved in, his supposed landlord — who, it turns out, never had the authority to lease the property — disappeared, and Park was evicted, with no way to get his money back.
It wasn’t just cash, he told AFP, but “my entire 20s and early 30s” that was stolen, and while legal proceedings are ongoing, he is highly unlikely to receive compensation.
“My dream of owning a house has disappeared and I’ve given up dating, not to mention getting married or having a child,” said Park, 37, who uses a pseudonym for his extreme activism to protect his privacy. of.
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Official figures show that at least 17,000 people like Park — about 70 percent of the victims are in their 20s and 30s — have been hit by jeonse fraud in recent years.
And activists say authorities are not doing enough to help victims or punish fraudsters, who often manage to hide and keep the money. The maximum penalty for fraud in the South is 15 years in prison.
Suicides
At least eight jeonse scam victims have killed themselves, activists say.
Many tenants take out bank loans to cover the huge jeonse deposit, intending to repay once they move in and the money has been repaid. But since they’ve been cheated, they’re still on the hook at the bank.
South Korea’s parliament last year passed a special bill aimed at helping victims, with the Financial Services Commission offering interest-free loans that can be repaid in up to 20 years.
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But jeonse scam victims say they won’t have to pay back the stolen bank loans at all — unless authorities get their deposits back from the scammers.
“Telling young people to spend the next 20 years paying back money lost to fraud is akin to telling them to stop living,” said Ahn Sang-mi, a victim, at a recent rally in Seoul.
The other option is to seek debt “rehabilitation,” which is a similar process to bankruptcy and eliminates some debt, but has long-term effects on credit scores and is especially harmful to young people, activists say.
The government should not “stigmatize young people, who are just starting their (adult) lives, with the mark of bad faith,” Jang Sun-hoon, a fraud victim from Daejeon, told AFP.
“Jeonse Hell”
Four years ago, Choi Jee-su, 33, used his life savings plus a bank loan to move into a jeonse flat to escape life in a cockroach-infested dormitory.
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But his apartment sold out from under him and the landlord disappeared with his deposit, leaving him saddled with debt.
To pay off his original bank loan, Choi took out high-interest credit card loans and sold his stocks, working grueling shifts at restaurants and living off cheap food to save cash.
He spent days making delicious meals for customers, but was “reluctant to buy a single packet of instant noodles” for himself.
“I would end up choosing the cheapest packet of noodles, only to cry while eating it because it tasted terrible,” Choi, who wrote a book called “Jeonse Hell,” told AFP.
The opposition Democratic Party has proposed a bill that would allow the state to reimburse renters for deposits lost to fraud. But the government pushed back citing cost concerns, with Lands Minister Park Sang-woo saying the young tenants may have been “playing fast and loose” when they signed the contracts.
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The National Assembly will vote on the bill on May 28.
Choi, who now works on an LNG tanker to save money for pilot training — a dream crooks forced him to quit — says the government must act.
The Jeonse scam is destroying lives, he said: “Victims lose everything, (our) lives, dreams and joy are shattered.”
Source: AFP