Solving the Unaffordable Housing Crisis; or Creating Another Global Financial Crisis [Read It And Eat 28/08]

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Major Headlines:

• Shein ironically sues Temu over Copyright Infringement

• In a complaint filed Monday in a Washington, D.C., federal court, Shein accused Temu—owned by PDD Holdings—of orchestrating a “coordinated scheme” of trade secret theft, counterfeiting, trademark and copyright infringement and false advertising. At least one Temu employee stole “valuable trade secrets” from Shein that identified the company’s top-selling products, which Temu then directed sellers on its platform to sell “knock-off versions” of, Shein alleges. Shein claims Temu “encourages” sellers to infringe on intellectual property rights and prevents brands from removing their products from Temu’s website. Shein also alleges Temu has “falsely pretended” to be Shein by creating accounts on X, formerly known as Twitter, purporting to be Shein, claiming Temu tried to “misdirect customers away from the Shein platform to the Temu platform.” Shein requests damages from Temu that would be determined after a trial by jury, in addition to attorney’s fees. A spokesperson for Temu criticised Shein for the “nerve to fabricate accusations” against the company and others “for the very misconduct they’re repeatedly sued for.” [Forbes]

• Nvidia Earnings Today:

• Nvidia’s earnings will be published today after the markets, analyst expect that they will earn $20 billion this quarter which is more than double in same quarter earnings last year, Nvidia is also known to have beat analyst expectations every quarter by at least 15%. These earnings boosts have been caused by the recent AI boom and its subsequent demand for AI chips, thus Nvidia being called the ‘Darling of the AI boom’, which has pushed Nvidia to an incredibly increased valuation where it at one time the most valuable company in the world. However, what its earnings reports represent is not just their earnings and revenues, but would be indicative of the state of the AI boom as it stands. In essence, if Nvidia beats analysts’ expectations it would be indicative of the slowing AI demand and growth. If it meets analysts expectations, it is indicative of the saturation and subsequent maturity of the AI market. If it misses analysts’ expectations, then it would be indicative of a slowing demand for AI at best or the end of the AI bubble at worst. [Financial Times]

• Podcasts Hosts are getting the Big Cheques:

• Travis Kelce is about to make the same amount of money filling the airwaves with tales of his dating life as he does from taking hits on the field. The Chiefs tight end and his brother, former Philadelphia Eagles legend Jason Kelce, just scored a $100+ million deal with Amazon’s Wondery for their podcast, New Heights. What we know about the deal is that  Wondery has exclusive distribution rights for the podcast and its back catalog, as well as the first-look option for any new consumer products or podcasts the brothers want to develop. The show will remain available across Spotify, Apple, and YouTube. For the six people with a Wondery+ subscription, episodes will be available early and ad-free. With only 98 episodes—significantly less than similarly valued podcasts—Amazon is likely banking on the show’s early popularity and Travis’s pop-star girlfriend, Taylor Swift, to change the narrative from the cycle of doom that’s defined podcast culture in recent years. Not too long ago, it seemed like any celebrity with a microphone could pull a multimillion-dollar podcast deal. Now, platforms are spending more selectively on shows and increasingly looking to bring in a big hit rather than grow a new one. This year alone, SiriusXM closed two deals worth over $100 million each, one for Alex Cooper’s Call Her Daddy and the other for SmartLess with Jason Bateman, Will Arnett, and Sean Hayes. Spotify renewed its deal with Joe Rogan for $250 million. Wondery paid $80 million to nab Dax Shepard’s podcast, Armchair Expert. Still, the biggest sign of changing tides is Spotify’s strategy shift: The company has been pulling back over the past two years as its $1 billion bet on podcasting failed to go boom, forcing it to lay off staff, cut programming, and abandon exclusivity contracts.

• Meta was forced to censor COVID 19 content on Facebook:

• Mark Zuckerberg has claimed that senior officials within the Biden administration "repeatedly pressured" Meta to "censor" COVID-related content during the pandemic. The claims by the CEO of Meta are in a letter dated 26 August to the House of Representatives Judiciary Committee. Zuckerberg said he regretted not speaking up about this pressure earlier, as well as other decisions he had made as owner of Facebook, Instagram and WhatsApp around taking down certain content. This included content Zuckerberg said was "humour and satire", with government officials expressing "a lot of frustration" when Meta didn't agree to do so, he alleged. "Ultimately it was our decision whether or not to take content down, and we own our decisions, including COVID-19-related changes we made to our enforcement in the wake of this pressure," Mr Zuckerberg said. Meta said it has now changed its internal policies to "make sure this doesn't happen again", the social media boss said in the letter, which was addressed to Republican representative Jim Jordan, the chairman of the committee. He said the company no longer demotes content while waiting for it to be fact-checked. In response to Zuckerberg's letter, the White House said in a statement: "When confronted with a deadly pandemic, this administration encouraged responsible actions to protect public health and safety. "Our position has been clear and consistent: we believe tech companies and other private actors should take into account the effects their actions have on the American people, while making independent choices about the information they present.” Republicans have trumpeted the letter as a personal victory as the campaigns for this year's November election continue to heat up. [Bloomberg]

Minor Headlines

• Apple announces September 9th as the date for its September “iPhone” event called ‘It’s Glowtime.’ [Forbes]

• Edgar Bronfman withdrew his bid for Paramount which means that the Skydance  Paramount merger is back on. [Financial Times]

• Ikea pilots a new marketplace for secondhand furniture. [Financial Times]

• Klarna aims to halve workforce with AI gains. [Financial Times]

• Apple releases a public beta of their newest software for iPhone Mac, iPad and Apple Watch. [CNBC]

• Apple CFO Luca Maestri to step down at the end of 2024. [Financial Times]

• NFL owners vote to allow Private Equity investments into the NFL. [Wall Street Journal]

• Hindenburg Research reveals short position in AI darling Super Micro calling it a serial recidivist [Yahoo Finance]

NEWS OF THE DAY:

Fixing the Unaffordable Housing Market (or creating another Real Estate Global Financial Crisis)

If you have not been living under a rock or a deliberate denier of the undisputed facts that are backed by evidence, housing has become unaffordable for many countries operating capitalist systems. This piece is not a bash on capitalism as that is a low hanging fruit, but an invitation to rethink the structure of housing in order to make it mutually beneficial to the landlords and the tenants. The current system is unsustainable, it is beneficial only to those who not only own homes but have their homes completely paid off. As much as a few people want to ignore it, pink-collar workers and grey-collar workers also need to live within the city where they work and are an integral part of our society. You need the bartender and barista just as much as you need the investment banker and the lawyer. They are the backbone of what gives life and leisure to the city, as such, housing and homeownership also need to be within their reach.

When attempting to address unaffordable housing within the rental markets, governments are lobbied against this and eventually all they are able to do is enforce a rent cap, not on the price paid in rent but on the percentage by which rent can be raised per year. Although it might seem like a good thought on paper, it is both not enough for the renter and ever so slightly detrimental to the landlord. Furthermore, in addressing astronomical house prices there is very little done by governments as they are lobbied to stay away from the markets, and as such, all the governments do is to give platitudes and promises during every election cycle. Tangible actions such as tax credits for builders, enforcement of the construction of affordable housing units before permits are given for more luxury condominiums, or credit benefits for those who are first-time buyers, a 1% deposit scheme again, just like with the rental market does not do enough for those who are buying. In reality, it does more for those who build or already have homes. I can understand how difficult it is to toe the line between appeasing those who have a lot to invest in order to make the country attractive for investors and simultaneously working for the benefit of those in the majority who voted them in and also live within the country, especially because the interest of both of these are in stark contrast with each other. However, we cannot continue in this current system and we need to rethink and maybe rewrite how these structures operate.

This piece is proposing forward an idea which if considered and implemented, could turn out to be a win-win solution that not only makes renting affordable, without being detrimental to the landlords but also makes homeownership within the grasp of those who rent with the added benefit of increasing liquidity and capital within the market. This system I believe can be replicated within any economy or society with a well established and regulated credit system, and can also be replicated within the commercial real estate space on contextual basis. I must make a disclaimer that although I am a master’s degree educated lawyer, who has an extremely keen interest in finance, business and the markets, I am not an economist, nor do I have experience with the development and implementation of housing policies. Furthermore, I have little real estate experience and I am yet to purchase my own house to be rented out, as such, this is a purely theoretical suggestion. It however does not take away that there is truth to what is said and if implemented, can actually achieve great results.

The Current System

The current system of renting is broken, particularly in high metropolitan cities like New York City, San Francisco, Hong Kong, Sydney, London, and Toronto, they are increasingly becoming unlivable. Taking New York City as an example, according to Zillow, the average price is $3,600 per month at the time of writing this, the average salary according to Statista is $74,407 as of 2022, and the minimum wage is $16 p/h which averages up to $33,280. This means that the average worker has to spend ~58% of their monthly earnings on rent alone and those on minimum wage, the pink-collar workers do not make enough to afford just rent in the city. The same is true for all the other cities, 46% in London, and 50.25% in Hong Kong. There is a study in the Canadian Center for Policy Alternatives that discussed the minimum wage, and juxtaposed it to what they called the “Rental Wage.” They described rental wage as the hourly wage that is required to afford the average market rent for the unit as compared to a one-bed and a two-bed, as of October 2022. In British Colombia, the minimum wage was $15.65 while the rental wage was $27.54, nearly double and the rental wage for a two-bed is $33.10. Having a roommate or living in a house share has gone from being the only for those who are young who use it as a launching pad to getting their own place after a few years, to what they have to live with for the rest of their lives as long as they are in that city especially if they earn minimum wage.

It is undisputed that minimum wage has for a while not been a living wage. Per its definition, the minimum wage is the absolute minimum or price floor an employer can legally pay their employees. This means those on minimum wage can barely afford to rent within the cities they work in. Furthermore, even white-collar workers struggle to afford rent as it is more than the recommended 30% of earnings.

The Benefits

I would be amiss to discuss the current housing market without stating that there are benefits of the current system and that is why it currently remains. Although only those in the minority receive those benefits, it does not change the fact that it is indeed beneficial. Housing has over time been a consistent preserver and transferrer of wealth from one generation to the next. Return on investment in housing has consistently risen, even after the financial crisis of 2008, those who were able to hold onto their homes saw an increase in the value of their homes. When a house is inherited, it can be lived in, rented or sold by the beneficiary putting them in a greater financial standing than those who do not. Furthermore, if one pays for a mortgage and they are unable to keep up with the mortgage payment, they can sell their equity in the home which ends up, on average, being worth more than the money that was put in. One can also refinance their home to gain more capital or sublet their home to generate even more value, any and all renovations further raise the value of the property. Alternatively, one can just sit on the property and do nothing with it for 5-10 years and still sell it or sell the land for more than what was used to purchase it. In essence, within the current system, property increases in value whether it is actively or passively managed.

The Pitfalls as it Relates to Renting

It is difficult to find a starting point when it comes to this, however, I think a good place would be to discuss the commodification of housing. Housing, although a good retainer of wealth has also become commodified in the same way gold, silver, steel and coal would be considered a commodity. Whenever this is discussed, it is usually discussed within the sect of human rights activists and social good advocates, this is mainly due to the fact that those who are human rights activists consider housing as a fundamental human right and those who are social good advocates believe that although there should be a market for luxury housing, everyone deserves a home that is habitable and comfortable and these homes should be subsidised by the government and by both the government via the taxes of the sale or rental of said luxury housings. Housing and real estate markets worldwide have been transformed by global capital markets and financial excess. Known as the financialization of housing, the phenomenon occurs when housing is treated as a commodity—a vehicle for wealth and investment—rather than a social good. In 2017 Special Rapporteur Leilani Farha explores in her report (A/HRC/34/51) to the UN Human Rights Council, the financialization of housing and its detrimental impact on the right to adequate housing. From mass forced evictions to make way for luxury developments, to nameless corporations purchasing real estate from remote boardrooms, to empty homes and people priced out of their communities because they simply could not afford to live there, the repercussions have been felt across the globe.

Another pitfall is the fact that, when renting homes where the mortgage is still being paid off, the renter is subjected to rent hikes to cover the increase in the mortgage rates, while simultaneously not benefiting from the reduction of said rates. It leads to a system where the rents go up whether or not the mortgage rate changes, the only difference being how much of an increase is incurred. It is even worse when the mortgage is completely paid off, as they would still experience year-on-year increases in rent prices.

The current system of calculating rent is done by the comparison of the rent prices within the area and what other comparable units would go for. However, within this commodification, these new buildings or newly renovated spaces audaciously demand a higher rental price which causes all the other homes within the area to also raise their rents to match, furthermore a raise in the rent price also leads to an increase in the value of the houses within the area as those houses could also be bought for the purpose of renovating and renting it out. This causes a negative feedback loop that has led to the current system of housing being unaffordable not only to rent but to also own, hence gentrification.

JEONSE [CHUN-say]

This may seem like an unrelated tangent but it is critical to establishing the new system being proposed. Jeonse, also known as chŏnse, key money deposit or key money, is a type of lease or deposit common in the South Korean real estate market. Instead of paying monthly rent, a renter will make a lump-sum deposit on a rental space, at anywhere from 50% to 80% of the market value, which is then returned at the end of the lease term. The amount of money required depends on the economy and the location of the property. Usually, the amount required is 50% of the property's value but can be as high as 60-80%. In 2014, it was reported that the average cost of a Jeonse in Seoul equaled almost $300,000. The tenant is then allowed to stay in the property "rent-free", not requiring any additional monthly payments, until the end of the lease, which is usually 2 years. Utilities and other costs (water, gas, electricity, cable, phone, internet, security) are applied for and paid by the tenant. Ten percent of the Jeonse is paid as a deposit and the rest should be paid upon moving in. The tenant must maintain the house during the rental period and must require the permission of the landlord when doing interior construction. If the loan is taken from a bank, the tenant is liable for the interest payments on that loan for the duration of the jeonse. With South Korea, this is typically a fixed interest rate for the duration of the contract. After the termination of the contract, the landlord must fully return the Jeonse amount.

To contextualize this; Tayo, an MBA graduate who landed a job at JPMC is looking to rent a flat in London where he meets Tolu, who owns a building of apartment units and is seeking immediate liquidity and agrees to rent one of those units for a period of two years under the Jeonse system. The value of that specific apartment unit is £500,000, and the deposit paid by Tayo to Tolu was agreed to be 70% of the value of the building, as such would be £350,000. This allows Tayo to stay in the unit “rent-free” (as he is only liable for the monthly interest payments)  for the next two years after which, his £350,000 would be paid back in full.

Benefits

To the Tenant

Although it may be difficult to raise the initial sum, when raised the renter does not have to worry about paying rent for the next two years. It also means that his two-year tenancy is secured and if broken they have the lump sum of money to find another house to rent. It also means that for the next two years, they would not be subjected to arbitrary rent hikes by their landlord. The fact that they do not have to pay rent also allows them to rigorously save their money for the duration of the tenancy, and if they earn well, they can use the refunded deposit in addition to the money that was saved and rent a bigger and better place at worse or buy their own place at best.

To the Landlord

This gives the landlord an interest-free loan which they can use to invest in other ventures or just deposit and keep the interest earned. This solves the liquidity problem that occurs when constructing new residential buildings. Referring to the example given above, with Jeonse, Tolu can rent out his entire building of 100 units, assuming that each unit is worth £500,000 and the deposit is pegged at 70% of the value of the unit, that is £350 million. If he only deposited that at a bank that gives him 5% interest on his money, he would have generated a total of £35,875,000 on the interest fee loan after returning the deposits. If he invested the money in the S&P 500 between July 2018 to July 2020, he would have earned £67,665,000 in profit. These examples are on the assumption that Tolu chooses not to reinvest in riskier assets, for example, if he had put the entire £350 million two years ago into Nvidia, those shares would be worth £3.1 billion, with total returns at 875% and that is after he returns the initial capital loaned.

The Drawbacks

To the Tenant

The hurdle of getting the initial deposit is nearly astronomical as house prices are not incredibly high within South Korea, as such, it is a common practice that Jeonse tenants have the deposit ready by taking a loan from a bank due to the sheer amount of the deposit. If they take a loan with a variable annual percentage rate (APR), which is fairly common, they are exposed to the risk of rising interest rates. However, banks can provide a very low APR (2-4%) as the deposit may be taken as collateral.

Furthermore, this system relies heavily on trust, the trust that the landlord is an honest person and would return the deposit at the end of the tenancy. Some landlords may have a large amount of overdue taxes. In such cases, the government may put the apartment up for auction in an attempt to collect the overdue taxes. When the apartment is sold, the government collects the overdue profits from the auction. Since national tax and local tax take a higher priority than the tenants, they may lose some or all of their deposit, depending on how much their landlords owe the government. It is also a possibility that the landlord may either abscond with the deposit or be unable to pay it back to the tenant which leads to a lawsuit as the only remedy.

Finally, by pegging the value of the Jeonse to the value of the property, coupled with the rising demand for housing within South Korea, it causes those houses to be continuously just out of reach for the renters.

To the Landlord

The first drawback of Jeonse for the landlord is the fact that they are still liable to pay back that loan. This is particularly difficult if the loan is put into risky investments and those investments fail.

Finally, by pegging the Jeonse to the value of the property, you are invariably shorting the property. If the value of the property falls, the landlord is still liable to repay the loaned amount. If the property of $400,000 with a Jeonse of $320,000 falls to $200,000 during a lease term, the landlord is still liable for the $300,000 and can only rent it out for a deposit of $160,000

A New Way: Saejeonse

On the assumption that no one else has proposed this before me, this is how I propose to fix the unaffordable rental market. I posit that a hybrid system that integrates the current capitalist system with Jeonse would be the way forward. In real terms, I propose that a prospective tenant take a loan from either a bank or a special purpose lender and give it to the landlord as rent, with a lease duration period between 3 and 5 years, at the end of which would be refunded directly to the lender. That sum would not be tied to the value of the property but would be the entire sum paid for the duration of the tenancy if monthly rent was paid. The tenant would then be liable to pay the utility bills such as gas, electricity water etc. and the interest that is accrued on the loan for the duration of the tenancy. I believe this drastically reduces the burden of rent while not being detrimental to the landlord.

To put this into context, Mary, a PHD graduate who landed a great job in London wishes to rent a 1-bedroom flat in London using this system. She convinces Osi, the owner of a 1-bed apartment to rent to her for a period of 4 years using this system. Assuming the rent is £2,100 per month, Mary would pay Osi a lump sum of £100,800 borrowed from the bank, if the interest rate is pegged at 5% for the duration of the entire tenancy that means that Mary only pays £420 per month excluding all other bills. Finally, the lender receives the principle at the end of the tenancy. She is ideally saving £1,680 every month or £80,640 at the end of the 4 years, which she can use as a down payment for a house worth £400,000.  All approximate calculations are done with the exclusion of the varying cost of bills, this is just in stark comparison to the rent that would have been paid instead.

The Benefits

To the Tenant

In addition to the benefits of Jeonse, the tenant is also able to negotiate the total lump sum to be paid to something more affordable, for example, Mary can offer that rather than the rate of £2,100 she would pay £1,900 which reduces the lump sum to £91,200 further reducing the amount paid in interest and increasing the amount saved.

Furthermore, even though the tenants understand it as a loan, in real terms, it would be perceived as rent being £420 a month. The lease agreement should also accord them the same rights as a tenant but with the added liberty of just paying the interest rates.

Finally, the prompt and timely payment of the interest of the loan and the final repayment back of the loan should ideally be calculated to boost the overall credit score of the tenant in order to get a bigger loan for another Jeonse or a better mortgage rate when purchasing their own property

To the Landlord

In addition to the benefits that a normal Jeonse system would bring, the landlord in this case can price and factor in increased rental rates within the lump sum that is paid to him. That means, if he builds a financial model that reasonably estimates the future cash flow, with the forecasted rent increases of the property, they can use that to calculate a lump sum that would be paid today.

As it is unpegged to the value of the home, the landlord still benefits if the property loses its value, this eliminates the risk that exists in the current Jeonse system. Furthermore, it eliminates the administrative problems that come with renting out your home, such as chasing down tenants for rent which could be particularly lucrative for those with multiple properties. Furthermore, if structured properly, the lease agreement can state that the landlord retains the deposit for the entire stipulated duration of the tenancy even if the tenant breaks the lease, thus reducing tenancy turnovers and the hassle that comes with finding a tenant.

If a landlord is struggling to rent out their unit due to reduced demand in housing, they can advertise this rent structure and maybe start a bidding war, which increases the final lump sum amount received and the best tenant renting their space. This would be particularly beneficial to the landlords of commercial units in this period.

The Market

The landlord and tenants would not be the only beneficiaries of this system as the market at large would also benefit.

The Banks would benefit as the creation of an SPLV (special purpose lending vehicle) would generate revenue in the millions in terms of interest paid by the renters to them. In the example of Mary and Osi, the lender would earn £5,040 per year in interest paid and £20,160 in interest paid over the duration of the tenancy (48 months).

The Real Estate Agents would benefit by having a new sector where they can generate fees. Who pays this fee would be dependent on what is negotiated by the tenant and landlord on a case to case basis. I would suggest that it is a one off fee paid by the landlord at the time when the lump sum is paid.

The Brokers whoever emerges as a Jeonse broker who acts in a similar role to a mortgage broker to find the best deal for their clients can also generate fees from these services.

The Rest of the Market on a macro level is introduced to an added pool of liquidity and capital by the landlords to be invested into when the deal is completed.

The Government currently in power would take the credit for simultaneously curbing the unaffordability of the rental market and lifting a significant number of people out of poverty and into the middle class. They can also introduce a tax on the gains from Jeonse that are declared which is always a welcomed boost to government revenues.

Homeownership could increase too if the shortfalls of the system are addressed early on.

The Risks

There is a possibility that these loans can be bought up and traded as swaps on the derivative market by the banks, it is akin to the financial market crash that happened in 2008 if left unregulated. This could also turbocharge the unaffordability of housing and create a new housing bubble as it may be further commodified, but worse because the interest rates may be so high that it makes no difference between what is paid in rent and what is calculated to be paid as Jeonse.

In order to discuss this and add to the critiquing of this system, I have enlisted the help of the brilliant economist and published author, speaker and friend, Francis whose help on my discussion into Reaganomics was vital to the success of the post. Take it away Francis:

The aspect of capitalism which in part has led to the largely global disdain for the system lies in the fact that most of the wealthy and uber-wealthy do not always play fair or pay their fair share. They spread earnings and find ways to not pay expected percentages in the form of taxes. Therefore, a potential risk could be the underreporting of earnings made from the deposits made by the tenants. In cases where incredibly high earnings are made from re-investment, many of the landlords are likely to under-report or perhaps not declare it.

Additionally, the institutions responsible for the Jeonse system ought to be fair, inclusive and free from interferences by powerful forces. Due to the long-term nature of the contracts and the lump-sum deposits, both parties signing a contract should be adequately protected against all possible scenarios (some of which would be hard to factor in). Unfortunately, many capitalist societies have earned the deserved reputation of only protecting the rich and politically connected, hence, tenants are not often protected in most cases. The court systems if compromised, can make rulings that do not protect vulnerable tenants.

Lastly, in cases of external shocks such as COVID-19, there ought to be clauses determining how payments would go on, and what would happen to the financing structure. Though the system is designed to lock-in the lending institution and tenant, the tenant and landlord for the duration of the lease agreement, external shocks leading to a global halt in economic activities can impact the capacity to repay or make investments. Also, grace periods are rare to find in rental agreements, thus giving little to no room for external shocks with the potential to derail payments in an unexpected manner.

The Regulators

The regulators need to step in to ensure that the landlords do not abscond with the deposit and in the unexpected death or bankruptcy of the landlord, the tenant’s deposits are recovered from the landlord’s estate. They need to ensure that the tenants who are undertaking this are financially literate or ensure that a neutral lawyer is involved to act in the best interest of the parties and no one party is being taken advantage of. They would also need to put a cap on the amount of interest that is charged to the tenant by the lenders.

Furthermore, in the UK, there can be a stipulation that the landlords who partake in Jeonse must invest at least 10% of the money received into companies that are publicly traded on the London Stock Exchange in order to boost the local market. This money needs to be government-backed to ensure that the landlords receive the 10% regardless of the state of the market to boost investor confidence.

Ideally, a tax credit or tax break should be given to the landlords in order to incentivize or encourage them to rent out their homes in this manner. However, there should also be parameters in which Jeonse can or cannot be used such as prohibiting using Jeonse to rent out a spare bedroom in their house.

The regulators need to set up a body that is similar to the FDIC in the US or the FSCS in the UK which lenders and landlords pay into periodically to be eligible to partake in Jeonse. The landlords pay into this from the percentage of profit gained at the end of the Jeonse period, and the lenders pay into this body as a percentage of the revenue gained by the total interest paid by the tenant. This body would be a regulator who gives licenses to both lenders and landlords to participate in this scheme it further gives a score of creditworthiness based on a variety of factors and indices to the landlords, striking off or revoking the license of those who are bad actors and also collates a list of the interest rates and benefits of the lenders that opt into the service. The monies paid would be dedicated to running the agency but it primarily is to guarantee that the money lent in the Jeonse would be repaid in the situation the landlord is unable to pay it at the end of the tenancy and also guaranteeing the aforementioned 10% government backing

Furthermore, there should be guidelines that prevent discriminatory lending practices within the lenders and penalties for breaching these practices would be set by and paid to the above said government body.

Final Thoughts

This could very well be the solution needed to make rent affordable once more and not at the detriment of the landlords. This is because if you continue to give temporary solutions to those who cannot afford adequate housing, it just kicks the can down the road a little further and at some point you will run out of road. The overarching theme of this piece is that you cannot patch a broken system and expect it to be suitable for long-term change, the change necessary requires a reimagining of and rebuilding the system from the ground up and that ends up being beneficial for all those involved within the transaction, particularly the tenants and the landlord. There is also the possibility that the missuse of this or the underregulation of this could result in financial catastrophe. If I should coin the term for this new system, I proposed, I would call it  Saejeonse (새전세)[Say-chon-say]. It may not be perfect as I am not an economist but as a lawyer, this has merit to it.

GEN-Z WORD OF THE DAY

Demure

Cool, calm, collected, cautios, delicate, reserved.

-deh-myeeeuh-

Poochina reference.

"See how I'm wearing my scarf? very cool, very demure, very cutesy..."