Restructuring Jeonse system in South Korea: the novel K-Jeonse model for sustainable rental housing

The conventional Jeonse system, a unique lump-sum deposit lease in South Korea, has historically stabilised urban housing. However, recent economic shifts including low interest rates, inflation, and falling property values have exposed its structural flaws, leading to a surge of deposit non-repayment, Jeonse fraud, and societal fiscal instability. The conventional system’s core failures stem from uncertain return mechanisms, information asymmetry, and a liability imbalance that shifts risk to tenants. The research proposes the K-Jeonse model (Policy Finance-Based Collateral Pool Loan Model) to systemically resolve these issues through a novel hybrid DSR-Action Research methodology, rather than relying on ad-hoc and reactive regulatory patching. The proposed model repositions Jeonse deposits as systemically significant financial instruments requiring third-party oversight, while effectively shifting the burden of risk from individual tenants to institutional governance structures. Specifically, the model decouples tenant deposits from landlord insolvency by utilising trust-based governance and insurance-backed guarantees. Findings suggest that the K-Jeonse model eliminates deposit return uncertainty, reduces landlord moral hazard, and minimises the psychological burden on tenants while ensuring fiscal sustainability. This research offers a comprehensive externally validated convergence model for the conventional Jeonse system, providing a scalable pathway toward secure rental housing in South Korea.