As homebuyers snap up fixer-uppers, renovation scams break their trust

As homebuyers turn to older apartments in Seoul and spend heavily on renovations, a new breed of scam is taking advantage of the boom: unscrupulous contractors pocketing payments upfront and vanishing or simply walking away from unfinished jobs.

While older units offer a more affordable way to break into Seoul's housing market, deceptive renovation practices have struck unwitting new owners such as buyer surnamed Park, who bought an older apartment on the outskirts of Seoul and moved in last March, only to fall victim to a contractor who took the deposit and failed to show up.

“The contractor drew up an estimate and said the renovation would cost 50 million won [$35,300], and asked me to pay 5 million won upfront to cover the deposit and some materials,” Park said. “After I sent the money, they couldn't be reached and they never showed up on the day the work was supposed to begin.”

Park eventually reported the case to the Korea Consumer Agency and hired another contractor to complete the renovation.

“I was already disappointed that I had to settle for an older apartment because I couldn’t afford a new one,” Park said. “Then I got scammed on top of that. It was devastating.”

Another recent homebuyer surnamed Kim, who purchased a 29-year-old apartment in Gangseo District, western Seoul, and hired a contractor to renovate it, realized in February that they had been scammed after seeing construction materials strewn across the floor.

“The contractor dragged things out for about three months, pretending to work on the renovation, and then one day the workers simply disappeared,” Kim said. “I sent the company a certified letter demanding the return of the several million won I had paid upfront, but it came back because the recipient could not be found.”

Kim thought about filing a criminal complaint with the police, but gave up.

Proving fraud can be particularly difficult in smaller renovation cases, experts say.

Park and Kim’s experiences are not unique.

Online forums related to real estate are awash with cautionary posts. One post wrote, "Even celebrities like actor Kim Sa-rang have fallen victim," referring to a video uploaded by the actor pointing out faulty renovation work, while another said, "Never pay upfront, no matter how much you trust the contractor."

The number of consultations related to interior construction and renovations sought at the Korea Consumer Agency rose from 3,873 in 2023 to 4,929 last year, according to agency data handed over to Reform Party Rep. Lee Ju-young.

This year has already seen 2,877 cases between January and July. The annual total is expected to exceed 5,000. Of those who sought formal relief, only about 30 percent of cases ended in settlements.

Over the same period, the number of reported apartment sales in Seoul involving buildings more than 20 years old more than doubled, rising from 35,582 in 2023 to 57,757 in 2024 and 83,783 in 2025.

“Most losses range from 1 million won to 5 million won, and if more than 30 percent of the work has been completed, it can also be difficult to establish deliberate deception,” a lawyer with experience handling such cases said. “There are relatively few reports [than actual cases], and unlicensed contractors appear to be proliferating because they deliberately exploit how difficult it is to bring fraud charges.”

One victim who requested anonymity recalled that the contract was very poorly drawn up.

“When I looked over the contract, I realized it was seriously inadequate, and the bank account was also under an individual’s name,” the victim said. “Even police told me it would be difficult to track them down, so I eventually gave up.”

Among the measures being discussed to prevent renovation fraud is a system that would cap upfront payments at a certain level and require interim payments to be made in installments based on the progress of construction.

“Codifying such requirements into laws including the Framework Act on the Construction Industry could conflict with the principle of private autonomy or freedom of contract under civil law,” the Ministry of Land, Infrastructure and Transport said.

“Rather than directly regulating contracts through legislation, there needs to be an approach that recommends reasonable standards through tools such as standard form governing construction contracts,” a ministry official said.

Rep. Lee stressed that the problem could no longer be left unaddressed.

“The principle of private autonomy must be respected, and we should be cautious about excessively restricting it through legislation,” the lawmaker said. “Cases of harm continue to occur repeatedly, and the problem can no longer be left unaddressed. The ministry must take concrete steps to prevent further harm, including standardizing the contracting process, disclosing information about contractors and putting consumer safeguards in place.”

BY KIM JEONG-JAE [lee.soojung1@joongang.co.kr]