The Korea Real Estate Board proposed a preliminary and post-review of the rental guarantee appraisal report to the Housing and Urban Guarantee Corporation (HUG). Since last year, HUG has only recognized appraisals from five designated appraisal companies to prevent excessive appraisal amounts when estimating housing prices for rental guarantee insurance subscriptions. However, the Korea Real Estate Board has suggested that this should be evaluated one more time.
According to the Korea Real Estate Board on the 22nd, it proposed to HUG that the appraisal report necessary for subscribing to rental guarantee insurance be reviewed both before and after, and the two agencies are in relevant discussions. This is a follow-up to the suggestion made during the National Assembly's Land, Infrastructure, and Transport Committee's inspection last year that a system be established to allow the Korea Real Estate Board to conduct preliminary reviews of HUG's rental guarantee appraisal reports.
Earlier, in 2023, it mandated that appraisal work for rental guarantee insurance subscriptions be conducted only by 40 appraisal firms designated by HUG. Although the Korea Association of Property Appraisers recommended these 40 firms, some raised concerns over inappropriate assessment cases, leading to three firms being excluded from recognition within a week, resulting in the number being reduced to five last year.
When a rental guarantee insurance applicant requests an appraisal to HUG, HUG randomly assigns an evaluating institution from the five selected institutions, conducts a preliminary assessment, and then informs the applicant of the results. The applicant can request a formal appraisal based on the preliminary assessment results, which can be used for the rental guarantee subscription. During this process, the appraisal institutions operate discreetly.
HUG stated that completing all procedures takes 2 to 3 weeks; however, landlords who have actually requested appraisals reported dissatisfaction, stating that it takes more than a month.
According to Lee Yeon-hui, a member of the National Assembly belonging to the Democratic Party, who received the report titled 'Current Status of HUG Recognized Appraisal Utilization for Rental Guarantee' from HUG, as of the end of September last year, a total of 1,362 appraisal applications were received by HUG since the relevant work began on August 12 of the same year. Among these, only six cases (recognition rate 0.44%) were issued with actual rental guarantee deposits based on the appraisal results recognized by HUG. There are also indications that, at that time, there were only five HUG appraisal firms eligible, while applications were received nationwide.
In this situation, the Korea Real Estate Board proposed to add preliminary and post-review. Some argue that the existing HUG appraisals are sufficient, and that the Korea Real Estate Board's additional review could be an unnecessary procedure. The Korea Real Estate Board noted, "Discussions are ongoing, and specific plans have not yet been released." A representative from HUG also replied, "We are reviewing the proposal."
Lee Eun-hyung, a research fellow at the Korea Construction Policy Research Institute, said, "We need to coordinate the details to determine whether HUG's current method of dispersing appraisals among various institutions is better or if the method of conducting preliminary and post-review by the Korea Real Estate Board is more acceptable," adding, "If the Korea Real Estate Board's preliminary and post-review can produce similar results with relative ease and cost savings, it could be worth considering. However, if it simply means shifting additional work onto the Korea Real Estate Board, it is hard to view positively."