As Seoul Apartment Jeonse Prices Rise, Renewal Rights Usage and Increased Renewal Rates Increase

As Seoul apartment jeonse prices rose in the second half of this year, the proportion of lease renewals using the contract renewal right (hereafter renewal right) during jeonse and monthly rent contract renewals increased compared to the first half. Additionally, the proportion of reduced renewal contracts, where the jeonse deposit was lowered compared to the previous contract, decreased, while the proportion of increased renewal contracts, where the deposit was raised, grew.

View of downtown apartments from Namsan, Seoul / Photo by Yonhap News

On the 5th, Real Estate R114 analyzed actual transaction prices of Seoul apartment jeonse and monthly rent through the Ministry of Land, Infrastructure and Transport’s real transaction price disclosure system. Among the jeonse and monthly rent renewal contracts signed in the second half of this year (July to October), 34.5% used the renewal right, up 1.7 percentage points from 32.8% in the first half (January to June).

The proportion of renewal right usage, which averaged 65.3% in the first half of last year, declined to 53.2% in the second half as jeonse prices fell and reverse jeonse difficulties intensified, and further dropped to around 30% in the first half of this year.

The renewal right is a tenant’s right in the lease market to request one renewal after a two-year contract expires, with a rent increase capped at 5%. When jeonse prices fall and reverse jeonse difficulties worsen, the usage rate of the renewal right is low.

However, since June this year, as Seoul apartment jeonse prices began to rise, the proportion of renewal right usage slightly increased in the second half.

By autonomous district, Geumcheon-gu saw the largest increase in the proportion of contracts using the renewal right, rising 19.6 percentage points from 10.5% in the first half to 30.1% in the second half. During the same period, Gwangjin-gu increased by 8.9 percentage points from 30.4% to 39.3%, and Seodaemun-gu rose by 6.0 percentage points from 28.3% to 34.3%.

The Gangnam 3 districts, which have many high-value jeonse contracts?Songpa-gu (27.5%→33.4%), Seocho-gu (31.3%→35.8%), and Gangnam-gu (29.1%→31.9%)?also saw a simultaneous increase in renewal right usage in the second half compared to the first half.

Due to the rise in jeonse prices, there were also more increased renewal contracts where the deposit was raised compared to the previous contract.

According to Real Estate R114’s analysis, the proportion of increased deposit renewals among renewal contracts was 39.2% in June but grew by 9.6 percentage points to 48.8% in October this year. Conversely, the proportion of reduced deposit renewals decreased by 6.8 percentage points from 46.5% to 39.7%.

Among these, the proportion of increased deposit renewals using the renewal right rose by 6.0 percentage points from 18.8% in June to 24.8% in October this year. During the same period, the proportion of reduced deposit renewals decreased by 5.5 percentage points from 69.8% to 64.3%.

Yeokyunghee, Senior Researcher at Real Estate R114, said, “As Seoul apartment jeonse prices continued to rise in the second half of this year, the impact of reverse jeonse difficulties subsided, leading to an increase in cases of increased deposit renewals. Next year, since the supply of move-in units will significantly decrease compared to this year, concerns about jeonse instability are expected, so government-level monitoring should be strengthened.”

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