Frequently Asked Questions
- How does JeonSafe Work?
JeonSafe is an improvement on the traditional and outdated Jeonse lease system, and it solves various issues with fraud and bankruptcy that plagued the old system. With JeonSafe instead of tenants giving their deposit to the landlord it is instead held in a high yield savings account which has the interest set up to be paid out as monthly rent to the landlord. This means that rent will always be paid on time even if the tenant loses their job, and there will never be a ‘tin can Jeonse’ situation which usually results in forced repossession or bankruptcy. With this new hybrid contract tenants have peace of mind that 100% of their JeonSafe deposit will be returned to them at the end of their lease because the money is always safe in the bank.
- Is it a scam?
Is it a scam? No, our company aims to replace the current jeonse fraud and scams with a much safer and more transparent system. Jeonse fraud is affecting thousands of tenants and landlords, causing people to lose their life savings and even resort to suicide. If/when housing prices start to fall due to decreasing population, the entire Jeonsae system will completely collapse because the incoming tenants will pay lower and lower 전세금 (jeonse deposit money) as house prices fall. So tenants will not be able to get their money back and it will result in a domino style crisis. Before this happens, we need to modernize and improve the Jeonse system by putting 보증금 (security deposit) into bank accounts where it is completely safe and not touchable by the landlord.
- Can I do JeonSafe with a traditional 전세대출 (Jeonse mortgage) loan?
Yes! You can ask your bank for a JeonSafe loan which may lower your rate and increase your borrowing limit, but a traditional Jeonse loan can also be used with JeonSafe if you get written permission from the issuing bank.
- Do I still need to pay for Jeonse insurance?
No. Instead of paying extra money for insurance that might not even cover the full amount of the deposit, with Jeonsafe your money is always safe in the bank so there is no need for insurance, because it isn’t being lended out or given to the landlord to use in risky investments. Even if the landlord goes bankrupt or has debts, your money will always be completely separate and safe in your account.
- Does the account earn interest?
Yes the bank account deposit earns a market competitive interest rate. This percentage can be used to cover monthly rental payments, our operations, and it eliminates the need to pay for additional insurance which saves you money.
- Will I need to pay 관리비 (property maintenance management fee) or utilities?
All specifics will be negotiated through the 부동산 (real estate) office but generally speaking tenants will pay for all of their utility usage each month.
- Has this new hybrid lease system been tested with a real property?
Yes! In fact, the CEO and founder is currently using a cross-border international version of the JeonSafe system which we hope to roll out to Koreans moving overseas for work or study, or going abroad on working holidays. We also want to offer this international product for foreigners coming to Korea who don’t trust the traditional Jeonse system or a random Korean landlord, but wish to live here rent-free while leaving the deposit money in their home country. The domestic version will continue to be tested and expanded and we are accepting applicants if you want to be one of the first users to join the waitlist.
- What if the Jeonse amount isn’t enough to cover the asking rate rent price given the market rate of interest yields?
If the interest return on the Jeonse deposit amount is insufficient to cover monthly rent then there are a few ways we can still offer a JeonSafe contract to satisfy all parties including banks, real estate offices, tenants and landlords. One option is for us to raise the JeonSafe price above the traditional Jeonse price. This is sustainable because it isn’t tied to the value of the home, so it can raise even above the purchase price of the property with no added risk like with traditional Jeonse deposits that exceed the home value. In cases where even with the elevated JeonSafe deposit amount the yield will still be too low to cover rent sufficiently, we will work with real estate agencies and banks to offer customers a variety of options including paying an additional fee in lieu of traditional Jeonse insurance which will be cheaper than existing options and provide 100% coverage. Other options we can explore include government subsidized insurance, preferential loan rates and higher business yields on savings account with banking partners.
- Is this new hybrid system legal?
Yes! There are no laws or regulations against this guaranteed rental deposit system, and we will continue to work closely with a team of lawyers to closely adhere to all relevant regulations.
- Are there any risks?
JeonSafe contracts are designed to be much safer than traditional jeonse, and they are facilitated by existing real estate offices who will settle any disputes between landlords and tenants that may arise. If you trust your real estate agency and your bank, then you can trust JeonSafe contracts because your money is kept at major banks and the lease agreements are completed by your real estate agent.
- Does JeonSafe work with homes that were purchased with the ‘gap investing’ (갭투자) strategy?
Currently, JeonSafe is only open to landlords seeking monthly rent payments (wolse), and therefore is not available yet for landlords who need to cover a large debt such as a gap investment acquisition. This is a protective measure and helps further guarantee that tenants and landlords.
- Why would anyone pay rent if the monthly JeonSafe loan payment is less than rent?
This is a great question because the loan payment is more affordable than traditional rent, and JeonSafe is made even more attractive when taken into account that each monthly payment increases the net worth of the tenant, and a JeonSafe contract will also protect you from fraud in a way that’s more valuable than existing insurance options.