A lease model premised on mutual disclosure of information by landlords and tenants is being introduced in Korea.
On the 7th, according to the Korea Association of Landlords, the association, together with a proptech (a portmanteau of property and technology) specialist company and a credit rating agency, will launch a "landlord-tenant screening service" early next year.
The service comprehensively provides landlords with information needed at the time of a lease contract, including reputation data such as a tenant's rent payment record and recommendation history from a previous landlord, as well as financial data such as credit information and lifestyle pattern information.
It also provides tenants with information on the landlord's dwellings through registry extract analysis, including rights analysis, records of unreturned deposits, national tax and local government tax delinquencies, and predictions of senior security deposits.
This model provides both sides with the information needed for a safe lease contract, based on the mutual consent of the landlord and tenant.
In recent years, as jeonse fraud surged and incidents of unreturned deposits spiked, the government and financial sector introduced various safety devices. In the process, a structure was created in which landlords had to widely provide and disclose information such as creditworthiness, the number of dwellings owned, whether they joined a jeonse deposit return guarantee and any guarantee incident history, whether they had tax delinquencies, whether they were in long-term arrears with financial institutions, and the frequency of address changes.
However, before signing a contract, it is impossible to verify information that may pose risks to landlords, such as a tenant's rent delinquency history, dwelling damage, smoking, or pet issues.
Observers have noted that this information asymmetry has contributed to an increase in disputes between landlords and tenants. Applications for dispute mediation between landlords and tenants filed with the Housing Lease Committee were 44 in 2020, 353 in 2021, 621 in 2022, 665 in 2023, and 709 last year.
Seong Chang-yeop, head of the Korea Association of Landlords, said, "The policy intent of protecting tenants is important, but now, rather than further strengthening protections, we need to design a system that balances the responsibilities and information of landlords and tenants," and added, "It is time to begin a social discussion on the extent to which we recognize the mutual 'right to know' of landlords and tenants."