The Housing and Urban Guarantee Corporation (HUG) is confirmed to be proceeding with forced auction procedures against more than 40 foreign landlords who caused guarantee incidents. From last year until the first quarter of this year (end of March), the amount that HUG has repaid on behalf of foreigners who did not return the rental deposits is approaching 15 billion won. The majority of the foreigners who failed to return the deposits had signed lease contracts in the metropolitan area, including Seoul, Gyeonggi, and Incheon. It is also known that many of them are of Chinese nationality. Since February, HUG has been moving to auction off the properties held by these landlords immediately after they cause a guarantee incident without any repayment grace period to recover the deposits.
According to HUG on the 27th, there have been 45 foreign landlords who caused guarantee incidents by failing to return rental deposits from last year to the first quarter of this year. The number of guarantee incidents is 58, with an amount of 14.7 billion won. HUG has made a subrogation payment for this amount. Under the strengthened management measures for foreign landlords implemented since February, all properties owned by the 41 foreigners, excluding 4 who repaid their deposits to HUG, were put up for forced auction.
HUG repays the deposit to tenants on behalf of landlords who cause lease guarantee incidents, and has granted landlords a maximum of a 6-month grace period for debt repayment. Additionally, to encourage voluntary repayment during this period, it supports partitioning repayment and grace periods. However, landlords on the list of concentrated management multi-housing debtors due to causing guarantee incidents three times or more would enter the debt recovery stage, such as forced auctions, immediately after subrogation without any partitioning repayment or grace period. However, starting from February, it was decided to conduct debt recovery through forced auction immediately after subrogation for foreign landlords without a 6-month grace period, similar to malicious landlords.
An official from HUG noted, "Since foreigners often have unclear residences, it is difficult to proceed with debt recovery through auctions or forced execution, and they may return to their home country, highlighting the need for preparation for this situation," and added, "In response, we are moving to recover debts immediately after subrogation."
The majority of guarantee incidents that HUG is enforcing are reported to have occurred in the metropolitan area, including Seoul, Incheon, and Gyeonggi. It is also known that buildings owned by Chinese nationals account for over 90% of these guarantee incidents. Seo Jin-hyung, a professor at the law and real estate department at Kwangwoon University, said, "Foreigners sometimes borrow excessively from overseas financial institutions to evade domestic loan regulations and buy properties, which can lead to guarantee incidents. Therefore, tenants should be a bit more cautious when signing lease contracts due to the high likelihood of guarantee incidents."