Financial regulators to tighten access to lending for pricy ‘jeonse’ tenants

January 12, 2014 Leave a comment

Financial regulators to tighten access to lending for pricy ‘jeonse’ tenants

2014.01.09 15:11:14

South Korea will drastically step up regulation of loans to tenants who pay high ‘jeonse’ deposits (lump-sum deposits) as early as next month.
They will have more difficult access to non-banking lenders such as mutual finance companies, and an increasing number of people in the vulnerable class will be subject to debt relief plan. The financial regulators Financial Services Commission and Financial Supervisory Service plan to develop and announce such household debt control measure at the end of this month, said sources in the financial sector Thursday.
The key is to curb lending to tenants with large housing deposits or rents to encourage housing sales, rather than lump-sum deposit rent jeonse, to stimulate the economy, while tightening non-banking lenders’ loans that have snowballed as a ‘balloon effect.’
First, Korea Housing-Finance Corporation will no longer issue letters of jeonse guarantee for houses with 600 million won ($562,224) or higher jeonse deposit. The authorities are discussing dropping the criteria to include lending to cover 500 million won or higher jeonse deposit, which could be adopted.
For homes with jeonse deposits between 300 million won and 400 million or more, the regulators will categorize and set different jeonse guarantee caps, depending on the size of the deposit, and scale back the current 90 percent jeonse guarantee cap to 80 percent at maximum.

Filed under Macro Trends

Unknown's avatarAbout bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

Leave a comment