Chater fraud becoming social problem in Korea, what’s happening

These days, charter fraud has become a big social problem in Korea for several months. Papaya Story has also dealt with news related to this several times. Things are growing to the point where I have to deal with them again.<

The continuing spread of charter scams

The charter fraud case is spreading beyond the metropolitan area to other provinces such as Daejeon and Busan. This situation of ‘the landlord who disappeared without returning the deposit, and the tenant who only rolls their feet’ is repeated.

This case again drew attention because Mr. A, one of the victims of charter fraud, left a will and ended his life on April 17th.

Mr. A committed suicide while suffering from the hardships of living because he had no money and did not receive the 90 million won deposit. This death of a charter fraud victim has happened three times in the last two months in Incheon alone.

In response, the Korean government is struggling to come up with a special countermeasure.

Falling real estate prices and charter fraud

There are many ways in which bad people engage in charter fraud. The most basic form is when the jeonse deposit becomes similar to the house price. Let's assume that a tenant paid 90 million won for a house whose house price was 100 million won in 2021 and entered the charter.

If the price of this house falls below 90 million won this year, this house will be worthless. Jeonse deposit is the same as debt from the landlord's point of view, so it becomes a worthless tin house.

That's why I'm just handing over this house to someone else without paying. If the new landlord took over the house without a dime in this way, it is called a ‘no capital gap investment’.

If the house price rises after the non-capital gap investment, the new landlord will be a jackpot, but if the house price falls, the new landlord will have to pay back the jeonse deposit. In this situation, if the landlord is unable to pay, the tenant will suffer.

Still, in this case, it's better because the tenant loses about 10 to 20% of the deposit.

When a landlord rents a house with a large bank loan with the intention of fraud from the beginning, he loses all the deposit.

However, in recent cases, one person owns dozens or hundreds of houses and scams in this way are increasing the number of victims.

So that foreign residents do not suffer

The Korean government provided support for additional loans to victims who lost their deposit when looking for a house, and also took care to enter rental housing. If the auction is going on, we have come up with a plan to postpone it.

However, there are cases where loans are rejected, and there are many cases where rental housing does not match the environment in which the victim lived.

The Korean National Assembly, which makes the law, is thinking about ways to support victims of charter fraud today. By all means, foreign residents should be extra careful not to fall victim to charter fraud.

Papaya Story