For a jeonse (lump-sum deposit lease) on a villa or multiplex unit in Korea, a deposit exceeding 126% of the government-assessed value is effectively barred from HUG's deposit return guarantee. On a unit assessed at 200 million won, the ceiling is 252 million won — and one won over trips the screening.
The 126% is not arbitrary. It is 140% of assessed value, treated as the property's recognized price, multiplied by a 90% collateral recognition ratio. Any senior mortgage on the title is then subtracted on top of that.
Where 126% comes from
The formula, as laid out by Kyunghyang Shinmun, is assessed value × 140% × 90% jeonse ratio = 126% of assessed value. The 140% converts the assessed value into a recognized property price; the 90% is the collateral recognition ratio the guarantee permits.
That ratio works as a condition: senior claims plus the jeonse deposit must not exceed 90% of the property price. So only a title with no mortgage at all can use the full 126%, and where a mortgage exists, its maximum claim amount comes straight off the top.
The standard has already been tightened once. Previously the recognized price ran to 150% of assessed value and a 100% jeonse ratio was allowed. On the same 200-million-won unit, the old rules permitted 300 million won; today the ceiling is 252 million.
Part of why this feels tight is that assessed values sit below market. According to Money Today, the realization rate for apartment assessed values averages about 69%. Multiply by 140% and you reach roughly 97% of market price; apply the 90% ratio and you land near 87%.
| Assessed value | Recognized price (×140%) | Guarantee cap (×90%) | With a 50m won senior mortgage | Under the proposed 80% ratio (×112%) |
|---|---|---|---|---|
| 150m won | 210m won | 189m won | 139m won | 168m won |
| 200m won | 280m won | 252m won | 202m won | 224m won |
| 250m won | 350m won | 315m won | 265m won | 280m won |
| 300m won | 420m won | 378m won | 328m won | 336m won |
| 350m won | 490m won | 441m won | 391m won | 392m won |
| 400m won | 560m won | 504m won | 454m won | 448m won |
The rightmost column applies the tightening proposal discussed below. At a 200-million-won assessed value, the cap would fall from 252 million to 224 million won — 28 million less.
A rejected application does not mean the deposit is large; it means the property's collateral value fails to cover it.
What determines the property price?
The table starts from assessed value because the valuation sequence differs by property type. The current priority order, per the same Money Today report:
- Apartments and officetels — 1st KB / Budongsan Tech market price, 2nd assessed value, 3rd the floor price in the Ansim Jeonse app
- Villas and multiplex units — 1st assessed value, 2nd Ansim Jeonse app price, 3rd the property register
The actual distribution is public. Through August 2022, apartments and officetels used the first source in 667,640 cases, the second in 124,724 and the third in 332. Villas and multiplex units used the first in 159,362 cases and the second in just 281. For villas, in other words, the assessed value decides almost everything — a market quote may exist but ranks below it.
The exception route is appraisal. Kyunghyang reported that only appraisals by firms HUG itself commissions are accepted, with a preliminary appraisal taking one to two days and a full appraisal two to three weeks. It is the workaround for newly built villas with no assessed value yet for the current year, or where the assessed value is judged far below market. At announcement, the appeal volume was estimated at 20,000–30,000 households a year.
HUG is also weighing changes to the valuation method itself — raising the 140% recognition ratio, or moving the Ansim Jeonse app price up the priority order. An official said the criticism that "property valuation should accurately reflect actual market prices is valid, so improvements are under review."
What the guarantee costs
According to Nongmin Shinmun, HUG revised its fee schedule for new applications from 31 March 2025, moving from an annual 0.115–0.154% to 0.097–0.211%. A 70% jeonse-to-value ratio is the pivot: below it the fee falls by up to 20%, above it the fee rises by up to 30%. Deposits are banded into four tiers — under 100m won, 100–200m, 200–500m and 500–700m won.
Discounts changed too. The 60% low-income discount stands, but the social consideration discount dropped from 50% to 40%, the one-home-owner discount was abolished, and a new discount for non-homeowners was added. Applying the rate range to common deposit sizes:
| Deposit | Low 0.097% (annual) | Mid 0.154% (annual) | High 0.211% (annual) |
|---|---|---|---|
| 100m won | 97,000 won | 154,000 won | 211,000 won |
| 200m won | 194,000 won | 308,000 won | 422,000 won |
| 300m won | 291,000 won | 462,000 won | 633,000 won |
| 500m won | 485,000 won | 770,000 won | 1,055,000 won |
These are annual rates, so a two-year lease costs roughly double. Because a higher jeonse ratio pushes you toward the top of the band, the same 300-million-won deposit can cost 580,000 won or 1.27 million won over two years depending on that ratio alone.
How far has the 112% proposal gone?
Seoul Finance reported that HUG, in a plan submitted to the National Assembly's land and transport committee, proposed cutting the collateral recognition ratio from 90% to 80%. Applied, that would set the cap at 112% of assessed value.
The driver is finances. Subrogated payments reached 3.3271 trillion won over January–October 2024, and the accident rate in the band above an 80% debt ratio was 84.6%. Recovery stayed in the 8% range, and the operating loss was projected at 3.9911 trillion won.
The market impact would be severe. Per Newdaily, an analysis by brokerage Ziptoss found that under a 112% standard, 69% of villa jeonse contracts signed in 2023 would fail the requirement if renewed on the same terms — 81.6% in Incheon, 69.6% in Gyeonggi, 67.6% in Seoul and 61.8% in Busan. HUG subsequently stated it was "not reviewing a reduction in the collateral recognition ratio at this point," and by October 2025 the discussion had shifted from the ratio to the valuation sequence.
What to check
- Look up the assessed value and multiply by 1.26 — that is the deposit ceiling. Run it before signing, not after
- Senior claim amount on the property register — subtract the registered maximum mortgage claim from the 126% figure for your real cap
- Timing — the application must be filed before half the lease term has elapsed. Many tenants let this lapse after the balance payment
- Opposing-power requirements — resident registration, a fixed date stamp and actual occupancy are prerequisites. Opposing power taking effect at midnight the day after registration is exactly where priority against a same-day mortgage is decided
- New-build villas — with no assessed value for the current year, you go via the Ansim Jeonse app price or an appraisal. Work backward from the two-to-three-week full appraisal
- If rejected — compare the cost gap between a lease registration order and a chonsegwon registration, but treat the rejection itself as a signal about the property's collateral capacity
Sources
- Jeonse deposit return guarantee keeps the 126% rule; appraised value allowed in valuation — Kyunghyang Shinmun
- HUG reviewing changes to jeonse guarantee property valuation criteria — Money Today
- HUG jeonse deposit return guarantee fees to rise up to 30% — Nongmin Shinmun
- HUG jeonse guarantee threshold to tighten to 112% of assessed value — Seoul Finance
- Under HUG's 112% rule, seven in ten villas would fail — Newdaily