[Edaily Reporter PARK JONG-HWA ] Mr. A, who rents out an apartment in Yeongdeungpo-gu, Seoul, is very worried as his jeonse contract is set to expire in October. The market value of Mr. A’s apartment exceeds 1.5 billion won, but he can only secure a mortgage of up to 400 million won—an amount that leaves him struggling to return the jeonse deposit to his tenant. Furthermore, in Seoul, when taking out a mortgage, a deduction for small-amount tenant security deposits (a priority repayment amount to be returned to future tenants, which is subtracted from the loan limit) reduces the loan limit by 55 million won, meaning the actual loan amount Mr. A can receive is even lower.

Mr. B, who has leased out his apartment in a certain area of Gyeonggi Province and is currently living as a tenant in another region, is also feeling anxious about having to return the jeonse deposit. Facing a cash crunch, Mr. B needs to take out a “jeonse eviction loan” to return the deposit to his tenant so he can move into his own apartment. However, because the area where his apartment is located was recently designated as a real estate regulated zone, he is now subject to the “stress DSR” (Debt Service Ratio) system. Under this system, his loan limit is reduced even further than before, leading Mr. B to worry that, if things continue this way, he may never be able to move into his own home.

As loan regulations and stricter real estate tax policies emphasizing owner-occupancy intersect, an increasing number of landlords are voicing their distress. This is because while the pressure to live in their own homes is growing, the burden of returning jeonse deposits has become even heavier.

According to the financial sector on the 12th, commercial banks are currently limiting loans for jeonse move-out purposes—applied for in connection with jeonse contracts signed in the Seoul metropolitan area and regulated real estate zones following the June 27 measures last year—to a maximum of 100 million won under the category of “living stability funds.” As of last June, the median jeonse prices for apartments in Seoul and the Seoul Metropolitan Area stood at 540 million won and 350 million won, respectively, making it even more difficult for landlords to return the jeonse deposits to tenants.

For jeonse contracts signed before the June 27 measures, there was no specific limit on the loan amount; however, if the property is designated as a regulated area, the LTV (Loan-to-Value ratio) and DSR (Debt Service Ratio) are lowered according to the regulated area standards—even for contracts signed prior to the designation—resulting in a lower loan limit than before. Furthermore, if the landlord changes during the term of a jeonse contract, the loan limit for moving out is capped at 100 million won—even for contracts signed before the June 27 measures.

In this situation, the government is revising the tax system to pressure landlords into actually residing in their properties. According to the tax reform plan announced by the government last month, even single-homeowners who do not actually reside in their own homes will see their tax deductions reduced compared to before, leading to increased burdens from the Comprehensive Real Estate Tax and capital gains tax. This leaves cash-strapped landlords in a difficult situation where they can neither bear the tax burden nor take out a loan to evict tenants.

Seo Jin-hyung, a professor in the Department of Real Estate Law at Kwangwoon University, said, “Forcing the obligation to live in one’s own home through tax policies or loan regulations could actually exacerbate chaos in the rental market.”