South Korea’s Archaic Rental System Is Costing People Their Life Savings
The jeonse system, which operates as what some argue is a government-sanctioned pyramid scheme, is showing cracks as landlords default on deposits.
Protest signs at an apartment building in Incheon where tenant suicides have been attributed to jeonse fraud.
Photographer: Shin Woong-jae for Bloomberg Businessweek
When Lee Cheol Bin realized he’d probably never recover the 210 million won ($163,000) deposit on his apartment rental in Seoul when his lease expires in November, the 29-year-old was gripped with anxiety and began avoiding friends and family. “I couldn’t sleep at night or focus on work for a few months,” says Lee, who had taken out a 120 million won loan to cover a portion of the deposit.
Lee’s landlord was found dead in a hotel room in October. A police investigation ruled out suicide or foul play, but local media reported that the man, whom they’d dubbed the “Villa King” because he owned more than 1,100 rental units across Seoul, was behind on tax payments and was being investigated for fraud. (“Villa” is what Koreans call small apartments in often dingy five- to six-story buildings that lack the amenities of those in better-appointed, sleek residential towers.) “I’ve heard a lot of things like ‘You should’ve done your homework,’ ” says Lee, who works at a real estate startup. “Realistically, I don’t believe I will get everything sorted by November, when my jeonse expires.”