A recent lease renewal for a 60.5-square-meter apartment in the Chang-dong Jugong 19 complex in Dobong-gu, Seoul, reported an additional monthly rent of 350,000 won while maintaining the previous deposit of 300 million won. This means the tenant will now incur an annual cost of 4.2 million won while keeping their existing deposit intact.
As tenants grapple with whether to secure additional funds for a jeonse deposit or to bear the monthly rent burden while searching for a new home, the situation is becoming increasingly complex. Cases are emerging where monthly rent is added during the renewal process. Households needing to move due to marriage, childbirth, or job changes, or those unable to easily change their residence due to school commutes, must now consider both the upfront costs and ongoing monthly expenses.
According to an analysis by Aju Economy of the Ministry of Land, Infrastructure and Transport's real transaction data, from January to September this year, out of 92,000 new rental contracts for apartments in Seoul, 51,275 were monthly rent agreements, accounting for 57.0%. This is a 10.3 percentage point increase from 46.7% during the same period last year. In contrast, among 78,194 renewal contracts, 43,097 were jeonse agreements, making up 55.1%. The data includes transactions where the type of contract—new or renewed—was recorded, and monthly rent includes half-jeonse agreements.
There have also been instances of increased monthly rent during the renewal process. For example, a 59.98-square-meter apartment in Mia-dong, Gangbuk-gu, renewed its contract on January 24, maintaining a deposit of 50 million won while raising the monthly rent from 950,000 won to 1.25 million won. This resulted in an additional monthly expense of 300,000 won, or 3.6 million won annually, without the tenant needing to move.
A real estate agent in the Chang-dong area noted, "Chang-dong is relatively well-regarded for its educational environment and has fewer entertainment facilities. Families with children are increasingly looking to increase their deposits or switch to half-jeonse arrangements, as the academy district is adjacent to Nowon-gu (Junggye-dong)."
In the same complex, new rental agreements have shown higher rents compared to renewals. From January to September this year, a comparison of 11 new contracts for the 59.98-square-meter SK Bukhan Mountain City with a deposit of 50 million won revealed a median monthly rent of 1.4 million won, while the median for three renewal contracts was 1.26 million won. This indicates a difference of 140,000 won per month, amounting to 1.68 million won annually. Last year, during the same period, the median monthly rent for new contracts was 1.3 million won for nine cases, while it was 1.1 million won for five renewals, showing an increase in rent levels for both types this year.
In terms of jeonse, new contracts also had higher deposits than renewals. From January to September this year, the median deposit for 17 new contracts in the same complex was 470 million won, compared to 393.75 million won for 26 renewals. Although individual conditions such as floor level and renovation status vary, the gap between the two contract types has widened to 76.25 million won, more than double the 34.75 million won difference during the same period last year.
Industry insiders report that renewing tenants are also facing increased rental costs, while those seeking new contracts are experiencing limited options due to a shortage of available properties. A real estate agent in Mia-dong stated, "Factors such as location, floor, and renovation status should determine prices, but currently, there is a lack of inventory."
The agent added, "Residents from nearby redevelopment and reconstruction areas in Mia-dong and Gil-eum-dong are also moving toward the Solsaem Station area. As external migration increases and inventory decreases, some residents are relocating as far as Suyu-dong from Samyang-dong."
Switching to monthly rent does not necessarily mean that tenants will receive their previous deposits back, thereby reducing their financial burden. In cases like the one in Chang-dong, where the deposit remains unchanged while monthly rent increases, tenants find their tied-up funds remain the same while their fixed monthly expenses rise. This may require adjustments to other living expenses or savings.
Ham Young-jin, head of the real estate research lab at Woori Bank, explained, "While switching to monthly rent can reduce the burden of a large deposit, it increases fixed housing costs, negatively impacting savings and consumption." He suggested that currently, it is essential for genuine demand from those needing to move due to marriage, childbirth, or job changes to secure rental housing at reasonable prices, and that there should be an active supply of vacant homes and available non-apartment housing in the short term.
* This article has been translated by AI.
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