The financial authorities have decided to make permanent the eased regulations on reverse jeonse refund loans that were set to expire this year.
On the 25th, the Financial Services Commission announced a legislative notice of a partial amendment to the Regulations on Supervision of the Banking Business to delete the sunset clause for the eased regulations on reverse jeonse refund loans.
The eased regulations on reverse jeonse refund loans were introduced in Jul. 2023 to help tenants who faced delays in getting their deposits back due to a sudden drop in jeonse prices or were worried they might not get their deposits back.
When a landlord borrows for the purpose of returning a jeonse deposit, the loan limit is increased by applying a 60% debt-to-income ratio (DTI) instead of a 40% debt service ratio (DSR). Although the financial authorities initially planned to run the system temporarily, they judged that the reverse jeonse crunch is continuing and deleted the sunset clause this time.