The photo shows residential houses and apartment complexes in Seoul, as seen from Namsan in Jung-gu, Seoul. (Image courtesy of Yonhap)
SEOUL, Feb. 16 (Korea Bizwire) — South Korea’s Housing and Urban Guarantee Corporation (HUG) has introduced a stringent “one-strike-out” policy to immediately initiate foreclosure proceedings against foreign landlords who fail to return tenants’ rental (jeonse) deposits, aiming to curb financial risks associated with non-compliant property owners.
HUG announced on Friday that the new measure, effective since February 3, seeks to address the growing issue of foreign landlords leaving South Korea without repaying rental guarantees, making debt recovery difficult.
The new policy places such landlords under the same strict supervision as domestic landlords with multiple delinquent rental cases.
Under the standard process, when a landlord fails to return a rental deposit, HUG compensates the tenant and provides the landlord with a repayment grace period of up to six months, during which installment payments or deferments are offered to encourage voluntary repayment.
However, landlords who have defaulted on rental deposits three or more times and are classified as “high-risk multi-property debtors” lose their grace period, with their properties immediately placed into foreclosure.
HUG categorizes landlords in this group if they have become unresponsive, failed to make any repayments for over a year, or have outstanding rental-related debts exceeding 200 million won ($137,931).
The new regulation extends this strict oversight to foreign landlords, given the heightened difficulty in recovering debts once they leave the country. HUG cited challenges in legal procedures such as document delivery and securing enforcement rights when landlords’ whereabouts become uncertain.
The number of rental deposit defaults by foreign landlords has risen sharply, from just three cases amounting to 500 million won ($344,828) in 2021 to 23 cases totaling 5.3 billion won ($3.66 million) in 2024, signaling an urgent need for regulatory intervention.
HUG emphasized that stricter enforcement is necessary to protect tenants and ensure financial stability in the rental housing market, particularly as cases involving foreign landlords continue to grow.
* Note to editor: The KRW-to-USD exchange rate referenced in the article is based on the rate applicable on the date of publication.
M. H. Lee (mhlee@koreabizwire.com)
