Korea’s credit bureau to launch landlord review service to prevent jeonse fraud

[Photo by Yonhap]

South Korea’s housing industry will soon have a service that comprehensively evaluates the credit level of a property and its owner, just as how banks lend money to individuals based on their credit scores and companies based on their credit ratings. The service is expected to help people determine whether a property is reliable in real estate sales or rental transactions.

Maeil Business Newspaper has learned Sunday that Korea Rating & Data (KoDATA) will launch a credit bureau (CB) service for housing that evaluates the value and reliability of real estate as early as November.

KoDATA has recently completed reporting relevant ancillary services to the Financial Services Commission, such as real estate rights investigation, civil documents viewing, and issuance application as well as real estate lease status and price investigation.

KoDATA’s real estate CB service is expected to be a type of report that synthesizes public information such as real estate registers, land registers, and building registers, and personal credit information of building owners and individuals. The use of personal credit information will be subject to the building owner’s consent.

KoDATA sees that there is potential demand for such a market for both renters and landlords.

“The recent jeonse fraud scandal has significantly slowed jeonse transactions, and even good landlords are being harmed,” said an official from the agency. “If a landlord has a solid credit history, a CB rating issued by a reliable agency made available for tenants can facilitate transactions and even create a price premium for the property’s trustworthiness.”

As long as the landlord agrees to provide his or her credit information, the homeownership and financial transaction status will be available. Once this blind spot is covered, it will be easier to identify homes that may be subject to rental scams or whose prices stand below the rental prices.

For example, prospective tenants can check how many houses a landlord owns in total, whether he or she has excessive personal debt, and whether his or her credit score is low due to a history of failing to pay debts on time.

Although the Ministry of Land, Infrastructure, and Transport launched the Safe Jeonse app to prevent rental fraud, renters are still worried.

The app shows the market price of multi-complex houses, officetels, and large apartments nationwide, and, with the landlord’s consent, the tenant can check the history of tax arrears or rental deposit accidents.

KoDATA’s real estate CB service focuses more on the landlord’s real estate holdings and financial situation. When utilized in conjunction with the Land Ministry’s app, it is expected to significantly reduce the risk of jeonse fraud and failures to return rental deposits.