"Concerns Over Deposit Fraud"... Seoul Villa Jeonse Ratio Hits All-Time Low

Villa-dense area in Yangcheon-gu, Seoul

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In the first quarter of this year, the proportion of jeonse (long-term lease) in the Seoul villa rental market was the lowest ever recorded. Due to the impact of high interest rates, the burden of interest on jeonse loans has increased, and issues such as "empty jeonse" and jeonse fraud have emerged, leading tenants to turn from jeonse to monthly rent.

According to real estate information provider Economy Man Lab on the 19th, an analysis of the Seoul Real Estate Information Plaza showed that the total number of jeonse and wolse (monthly rent) transactions for villas (multi-family and row houses) in Seoul in the first quarter was 27,617. Among these, jeonse transactions accounted for 14,903, representing 54.0% of the total transactions. The jeonse ratio in the first quarter of this year was the lowest since the Seoul Real Estate Information Plaza began compiling related statistics in 2011.

Among the 25 autonomous districts of Seoul, Nowon-gu had the lowest proportion of jeonse for villas. In the first quarter of this year, Nowon-gu recorded 424 villa rental transactions, of which 179 were jeonse, accounting for 42.2%.

Following were Jongno-gu at 42.6%, Gangnam-gu at 43.0%, Songpa-gu at 44.8%, Seodaemun-gu at 46.0%, Gwanak-gu at 46.3%, Jung-gu at 47.0%, and Seocho-gu at 49.9%, all with jeonse proportions below 50%.

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The proportions of quasi-monthly rent and quasi-jeonse are on the rise. In the first quarter of this year, the number of quasi-monthly rent and quasi-jeonse transactions for Seoul villas were 8,417 and 3,223 respectively, accounting for 30.5% and 11.7% of contracts. Notably, the proportion of quasi-jeonse reached an all-time high since related statistics began being compiled.

Nowon-gu had the highest proportion of quasi-monthly rent in Seoul at 39.9%, while Songpa-gu had the highest proportion of quasi-jeonse at 18.6%.

Hwang Hansol, a research analyst at Economy Man Lab, said, "Due to concerns over empty jeonse and jeonse fraud, anxiety about villa jeonse is growing, causing the jeonse proportion to gradually decrease while the proportions of quasi-monthly rent and quasi-jeonse are increasing."

Meanwhile, the proportion of jeonse in the Seoul apartment rental market also recorded a historic low in the first quarter of this year. The total number of apartment jeonse and wolse transactions in Seoul in the first quarter was 63,835, with jeonse transactions accounting for 36,840, or 57.7% of the total. This is the lowest first-quarter figure since the Seoul Real Estate Information Plaza began compiling related statistics in 2011.

The district with the lowest jeonse proportion for apartments in the first quarter was Guro-gu. Out of 2,563 apartment rental transactions, 1,187 were jeonse, accounting for 46.3%.

The proportion of quasi-monthly rent for apartments also reached an all-time high. In the first quarter, quasi-monthly rent transactions for Seoul apartments numbered 14,531, accounting for 22.8% of the total.

Rental contracts can be classified into jeonse, monthly rent with jeonse, quasi-monthly rent, and quasi-jeonse. Monthly rent refers to rental transactions where the deposit is less than or equal to 12 months of rent; quasi-monthly rent refers to transactions where the deposit is between 12 and 240 months of rent; and quasi-jeonse refers to transactions where the deposit exceeds 240 months of rent.

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