"Jeonse Disappears: 40% of Seoul Apartment Rentals Are Monthly Rent"

An apartment view of downtown Seoul from Namsan, Seoul. (Photo by Yonhap News)

[Asia Economy Reporter Hwang Sumi] As the jeonse (long-term lease) shortage in Seoul apartments intensifies, rental transactions involving monthly rent, such as banjeonse (half-jeonse), have increased to the highest levels.

Due to the jeonse scarcity and landlords passing on tax burdens, cases where tenants reluctantly enter into banjeonse contracts appear to be continuously rising.

According to the Seoul Real Estate Information Plaza on the 12th, a total of 12,567 apartment lease contracts (based on contract date) were signed in Seoul last month, of which 4,954 contracts (39.4%) involved monthly rent.

This is 3.9 percentage points higher than July (35.5%), marking the highest level this year.

Seoul classifies lease contracts into four types: jeonse, monthly rent, quasi-monthly rent, and quasi-jeonse. Monthly rent refers to leases where the deposit is less than or equal to 12 months' worth of rent; quasi-monthly rent refers to deposits between 12 and 240 months' worth of rent; quasi-jeonse refers to deposits exceeding 240 months' worth of rent.

Among these, the proportion of contracts commonly called banjeonse?monthly rent, quasi-monthly rent, and quasi-jeonse?has significantly increased since the new lease law was enacted at the end of July last year.

Apartment complexes in downtown Seoul as seen from 63 Square in Yeouido, Seoul. (Photo by Yonhap News)

In fact, from August last year for one year, the proportion of banjeonse transactions was 35.1% (65,088 out of 185,273 contracts), which is 7.0 percentage points higher than the 28.1% (55,215 out of 196,374 contracts) recorded in the year before the law's enforcement.

This year, the ratio has approached 40%, with 39.2% in April, 38.4% in June, and 39.4% in August.

By region, Gangnam-gu, where the deposit burden is high, saw an increase from 39.1% in the previous month to 45.1% last month, a 6.0 percentage point rise. Songpa-gu also rose from 33.8% to 46.2%.

In Mayongseong (Mapo-gu, Yongsan-gu, Seongdong-gu), the banjeonse transaction ratio in Mapo-gu increased by 12.2 percentage points from 40.0% to 52.2%, accounting for more than half of lease transactions.

Gangdong-gu (50.2%) and Jungnang-gu (52.4%) exceeded 50%, while Guro-gu (46.5%), Eunpyeong-gu (45.1%), and Jung-gu (47.2%) also had ratios above 40%.

Park Wongap, Senior Real Estate Specialist at KB Kookmin Bank, said, "Since the new lease law was implemented, renewal transactions have increased, significantly reducing jeonse listings, and with the deposit increase rate capped at 5%, the trend of jeonse turning into monthly rent seems to be accelerating. It is expected that lease transactions involving monthly rent in the form of banjeonse will continue to increase."

This content was produced with the assistance of AI translation services.