Confusion in the jeonse market seems to be increasing as the government’s announcement of the “Septe..

Confusion in the jeonse market seems to be increasing as the government’s announcement of the “September 7 Measures” includes measures to regulate jeonse loans. There are observations that it will affect both landlords and tenants, and there are also concerns that jeonse sales could be significantly reduced.

30% impact on single-home owners using lease loans

According to the government and the real estate industry on the 9th, the loan limit is estimated to be reduced by about 65 million won on average for single homeowners who use 200 million won of jeonse loans in the Seoul metropolitan area under the “September 7 Measures” additional management plan. According to the current statistics, about 30% of those who own one house and receive lease loans under the guarantees of three guarantors (Seoul Guarantee Insurance, Korea Housing Finance Corporation, and Korea Housing City Guarantee Corporation) in the metropolitan area received loans worth more than 200 million won and less than 300 million won.

However, loans can be made to the same limit as before when extending the maturity of lease loans received for lease contracts concluded before the enforcement of this regulation.

The main purpose of this measure is to unify the current limit on jeonse loans for each guarantee institution to 200 million won. Although there may be inconveniences for those whose loan limits are decreasing, they have houses and the total debt-to-principal repayment ratio (DSR) limit is not applied to jeonse loans, so they were targeted for reducing the jeonse loan limit based on the judgment that there would be a plan to lend funds through their own houses if necessary.

The loan regulation, which strengthens the mortgage loan ratio (LTV) in regulated areas in the Seoul metropolitan area from 50% to 40%, plans to apply the same to additional regulated areas in the future.

A sharp drop in lease sales due to the “June 27 Loan Regulations”

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This is why there are concerns that sales could be greatly reduced as the limit on lease on a deposit basis loans is reduced following the prediction that the monthly rent of apartments will be accelerated in the aftermath of the June 27 loan regulation.

As of July 25, the number of lease on a deposit basis for apartments in Seoul based on real estate platform ASIL was 24,011, down 3.4% (844 cases) from the 27th of last month (24,855), the day of the announcement of loan regulations.

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On the other hand, monthly rent increased by 2.4% (446 cases) to 19,242.

“It is worth noting that in addition to supply measures, we have implemented measures to curb demand, such as additional regulations on loans in regulated areas,” Ham Young-jin said. “The movement to increase sales prices centered on the Seoul metropolitan area in the fall is also expected to be limited.”

However, he stressed, “The implementation and speed of this housing supply measure, the active participation of the private sector, and harmony with financial and regulatory measures that will minimize inconvenience to end-users while reducing speculative demand will be key factors in determining the success or failure of the policy.”