HUG faces financial strain amid rising jeonse guarantee claims

The Korea Housing & Urban Guarantee Corporation (HUG) is facing significant financial strain due to a surge in jeonse (lump-sum deposit) guarantee accident claims. To bolster the corporation's capital, the South Korean government has injected over 6.4 trillion won in cash and in-kind contributions between 2021 and 2025.

A substantial portion of this support has been concentrated recently, with approximately 88% of the total five-year investment occurring between 2024 and 2025. In 2024 alone, the government contribution reached 4.7 trillion won, accounting for 73% of the total amount provided during this period.

HUG's financial instability is driven by the burden of subrogation payments, where the corporation compensates tenants when landlords fail to return jeonse deposits. This led to a massive net loss of 3.86 trillion won in 2023 and 2.52 trillion won in 2024. While the corporation reported a net profit of 1.57 trillion won last year, the balance of unrecovered claims remains high, standing at approximately 6.82 trillion won as of late June.