Stricter Mortgage Rules for Multi-Home Owners Spill Over to Rental Market: "Jeonse Supply Shrinks, Housing Costs Rise" [Real Estate AtoZ]

Concerns Grow Over Jeonse Supply as Multi-Home Owners Sell Apartments

Housing Cost Expected to Rise Amid Supply-Demand Imbalance

"Drying Up of Jeonse Listings May Prolong Market Instability"

Apartment-dense area in downtown Seoul. Photo by Yonhap News Agency

"There is a large complex with over 2,600 households right next door, but there are only two jeonse listings currently available. If multi-home owners put more properties on the market for sale, the supply of jeonse units will decrease further, and that will drive up prices." (Broker A in Sanggye-dong, Nowon-gu)

The government's decision to prohibit extensions of mortgage loan maturities for apartments owned by multi-home owners and rental business operators in the Seoul metropolitan area and other regulated zones is drawing attention to its impact on the rental market. If a tenant is currently occupying a unit, an exception to the regulation applies until the end of the lease contract. However, if the landlord decides to sell, tenants will have to vacate without extending their lease, raising concerns about increased housing insecurity. As jeonse supply decreases while demand remains steady, housing costs are expected to rise.

On April 1, the government announced that, starting April 17, extensions of mortgage loan maturities will, in principle, be banned for multi-home owners holding apartments in the Seoul metropolitan area and other regulated regions. This measure comes 47 days after President Lee Jaemyung first ordered tighter lending restrictions for multi-home owners on February 13.

The regulation applies to all individuals and rental business operators (including corporations) who own two or more residential units, regardless of location. However, an exception allows loans to be retained until the end of the jeonse or monthly rental contract, as long as a tenant is still residing in the apartment.

Despite these exceptions, many in the market believe jeonse tenants may experience increased housing insecurity. If a multi-home landlord sells an apartment, tenants must vacate the property once their lease ends. Lease renewals or the right to request a contract renewal can only be exercised until April 16; after that, extensions will no longer be permitted.

Yoon Sumin, Real Estate Specialist at NH Nonghyup Bank, stated, "The overall supply of jeonse will decline, exacerbating housing insecurity. The current trend is to list more properties for sale while prioritizing owner occupancy, so the supply of jeonse is bound to keep shrinking."

Due to the scheduled end of the capital gains tax relief for multi-home owners on May 9, the number of properties for sale is increasing, but the supply of jeonse units continues to decrease. This new regulation may accelerate the decline. According to real estate big data firm Asil, as of today, the number of jeonse listings for apartments in Seoul stands at 15,735—a decrease of nearly 32% from the beginning of this year. During the same period, Nowon-gu saw a 65.6% drop, followed by Guro-gu (60.4%), Geumcheon-gu (60.2%), and Jungnang-gu (59.0%) in terms of declining jeonse supply.

As jeonse supply shrinks, demand is inevitably shifting to monthly rentals, and the share of monthly rental transactions is expected to keep increasing. In the Seoul apartment market, so-called "gap investments" (purchasing with a jeonse tenant in place, financed by loans) have become difficult, reducing jeonse supply and leading to more monthly rental agreements. According to Ministry of Land, Infrastructure and Transport housing statistics for February 2026, the proportion of monthly rentals among all apartment transactions in Seoul rose by 6 percentage points year-on-year to 49.8% in February.

Ham Youngjin, Head of Real Estate Research Lab at Woori Bank, commented, "This measure could reduce the supply of jeonse apartments and accelerate the shift to monthly rentals. While it may help stabilize the sales market, it could place additional pressure on the apartment rental market."

The main issue is that the reduction in jeonse supply could lead to higher deposits or conversion to monthly rentals, increasing the overall housing cost burden. In Seoul, where new jeonse supply is limited and many prospective buyers remain unable to purchase homes, supply and demand are increasingly mismatched.

Broker B in Guro-dong, Guro-gu, said, "For units with an exclusive area of 59 square meters, the jeonse deposit has risen by 50 to 60 million won since the beginning of the year. There is only one such listing at the moment, and inquiries for jeonse units remain steady. With supply expected to fall further, deposits will likely keep rising."

Kim Hyosun, Chief Real Estate Specialist at KB Kookmin Bank, said, "Both jeonse deposits and monthly rents are rising at the same time, and the conversion to monthly rentals is happening very quickly. In some industrial complexes, the proportion of monthly rentals exceeds 60%. Given that this regulation and other factors are structurally pushing up rental prices, the monthly housing cost burden is likely to continue increasing."

Nam Hyukwoo, Researcher at Woori Bank Real Estate Research Institute, also noted, "The number of jeonse listings is drying up over time, so instability in the rental market will likely persist. While inflation is a factor, there are also structural pressures driving up prices, meaning the cost of both jeonse and monthly rentals will likely continue to rise."

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