The South Korean government will effectively block jeonse (lump-sum housing deposit) loans for single-home owners in the Seoul metropolitan area who own homes but do not actually reside in them, instead renting them out to tenants.

The measure is aimed at curbing so-called "gap investments," where individuals take out jeonse loans to rent a home for themselves while simultaneously owning a property with a tenant.

According to comprehensive financial measures for real estate market stability announced by the Financial Services Commission, starting in January next year, single-home owners in the metropolitan area and regulated zones who have never actually lived in their owned property and have rented it out to tenants outside their immediate family will no longer be eligible for jeonse loan guarantees.

Because bank jeonse loans rely on guarantees from institutions such as the Korea Housing Finance Corporation, the Korea Housing & Urban Guarantee Corporation, and SGI Seoul Guarantee, the suspension of these guarantees will make it virtually impossible to obtain jeonse loans.

Financial authorities estimate that jeonse loans received by such single-home owners amount to approximately 60,000 cases, totaling 9.3 trillion won.

However, individuals who have registered their address in their owned home even once will be recognized as having actually resided there.

As the system takes effect in January next year, cases where residents transferred their addresses within this year will also be recognized.

Consequently, critics point out that false address registrations could occur to evade the jeonse loan regulations.

The hurdles for single-home owners to secure jeonse loans will generally become higher.

Currently, the jeonse loan guarantee ratio is 80% in the metropolitan area and regulated zones, and 90% in other regions. Moving forward, the ratio for single-home owners will be lowered by 10 percentage points each to 70% and 80%, respectively.

A lower guarantee ratio increases the risk that banks must shoulder, which could lead to stricter loan screening or reduced borrowing limits.

However, individuals without a home will continue to receive the current guarantee ratios.

The income calculation method for the Debt Service Ratio (DSR), which determines loan limits, will also be tightened.

Currently, wage earners have their loan limits calculated based on their income over the past year. In the future, if income increases by more than 20% compared to the previous year, the average income over the past two years will be applied; if it increases by more than 30%, the average income over the past three years will be applied.

This means that even if income temporarily surges in a specific year due to large performance bonuses, it will be difficult to have that fully reflected to significantly increase loan limits.

The government's stance is to secure borrowing capacity for genuine home buyers while blocking funds from flowing into speculative loans such as gap investments.

At the same time, critics note that the policy could restrict normal residential relocations for single-home owners who rent out their own homes and live in jeonse properties in other regions due to reasons such as employment or children's education.

Reported by Kim Minjeong | Video by Lee Yujin | Graphics by Yang Hyemin | Produced by SBS Digital News