Seoul: Park Hyeon-soo lived in a windowless micro-apartment in Seoul for ten years, working double shifts and saving every cent for a down payment on a luxury home. South Korea’s rental housing market has a unique system called jeonse, where tenants pay a large deposit — sometimes hundreds of thousands of dollars — to live rent-free before getting cash when they move out. .
The idea is that the home owner gets interest-free money for the mortgage and the renter gets the house for free as collateral for the property. But the system is now riddled with fraud – police data shows that more than a billion dollars is lost to fraud each year.
The system once accounted for two-thirds of the rental market in the 90s, but has gained popularity due to increased risk awareness.
Park told AFP that he often worked from 9:00 a.m. to midnight to save $73,000. But after paying the deposit and moving out, the landlord, who is believed to have been authorized to rent the property, disappeared, and Park could not get her money back.
He told AFP that he stole not only money but also “my 20s to 30s” and that he is unlikely to receive restitution as the case continues.
“My dream of owning a house was shattered, and I refused to talk about marriage or having children,” said Park, 37, who uses a nickname for her comedy to protect her privacy.
Official figures show that at least 17,000 people like Park – about 70 percent of victims in their 20s and 30s – have been defrauded in recent years.
Activists say the authorities often do not do enough to help victims or punish fraudsters who manage to hide and save money. In the South, the maximum penalty for forgery is 15 years in prison.
According to activists, at least eight victims of the scam have committed suicide.
Many tenants take out bank loans to cover large security deposits with the intention of paying them back after they move out. But since they are scammers, they still enter the bank.
South Korea’s parliament last year passed a special law to help victims, and the Financial Services Commission has offered interest-free loans that can be repaid in up to 20 years.
But fraud victims may never have to repay stolen bank loans unless the authorities recover their deposits from fraudsters.
“Telling a young person to spend 20 years trying to pay back the money lost to fraud is like ending their life,” said victim Ahn Sang-mi at a recent meeting in Seoul.
Another option is to look for debt “rehabilitation,” which is similar to bankruptcy and clears some debts, but has long-term effects on the credit score and is especially harmful for young people.
Jang Sun-hoon, a fraud victim from Daejeon, told AFP that the government “shouldn’t discriminate against young people who are just starting their (adult) lives with credit scores.”
Four years ago, 33-year-old Choi Jee-su moved into Jones’ apartment to save his life and escape living in a cockroach-infested dormitory with a bank loan.
But the apartment sold below him and the landlord lost his deposit and went into debt.
To pay back the original bank loan, Choi took out high-interest credit cards, sold stocks, worked hard in restaurants and lived on cheap food to save money.
She spends her days preparing delicious meals for customers, but she is “reluctant to buy individual packet meals” for herself.
“I will choose the cheapest lunch box and I will cry while eating,” Choi, who wrote the book “Jeonse Hell,” told AFP.
The opposition Democratic Party has proposed a bill that would allow the state to compensate tenants for deposits lost due to fraud. But the government backed down, citing cost concerns, and Lands Minister Park Sang-woo said young tenants could “play fast and loose” when signing contracts.
Choi, who is currently working on an LNG tanker to save money for pilot training, says the dreamers are forcing him to quit – and the government needs to act.
Johnson’s fraud devastates people: “Victims lost everything, (our lives, dreams and happiness destroyed”).
Debt, suicide, fraud: South Koreans hit by real estate scams
