Last year, the proportion of monthly rent transactions, including guaranteed monthly rent and half-monthly rent for dwellings, significantly exceeded the average of the last five years. This is interpreted as a preference for monthly rent due to the ongoing effects of the home lease fraud incident and heightened borrowing thresholds. It is expected that the trend of increasing monthly rent leases will continue this year, particularly for non-apartment dwellings such as villas and officetels, amid anticipated real estate market stagnation and stricter loan regulations.
According to the Ministry of Land, Infrastructure and Transport, the proportion of monthly rent in national lease transactions from January to November of last year was recorded at 57.4%. This is 11.3 percentage points higher than the recent five-year average of 46.1%.
By type of dwelling, the proportion of monthly rent increased both in apartments and non-apartments, but the preference for monthly rent was more pronounced in non-apartments. In non-apartments, the proportion of monthly rent rose to 69.5%, an increase of 17.0 percentage points compared to the five-year average of 52.5%. In apartments, the proportion of monthly rent increased by 5 percentage points from the five-year average of 39.2% to 44.2%, indicating a smaller increase compared to non-apartments.
The conversion rate from lease to monthly rent for dwellings has steadily risen, reaching 6.0% as of October last year. The lease-to-monthly rent conversion rate indicates the ratio at which the lease price is replaced by monthly rent.
The increasing proportion of monthly rent in dwelling leases is mainly due to the ongoing effects of home lease fraud incidents. Following the incidents that occurred in 2023 involving villas and officetels, the proportion of monthly rent has significantly risen, particularly among non-apartments. To avoid lease fraud, tenants seem to prefer opting for monthly rent payment instead of providing a lump sum to landlords.
A Ministry of Land, Infrastructure and Transport official noted, "The increase in the proportion of monthly rent seen since early 2023, when the lease fraud occurred, indicates that the fraud has influenced the rise in monthly rent. In particular, the increase in monthly rent has been prominent in non-apartments where the fraud took place."
The heightened borrowing thresholds are also cited as a reason for the increased proportion of monthly rent in dwelling transactions. Due to the ban on lease loans for homeowners and the persistence of high-interest rates, tenants are opting to pay monthly rent instead of borrowing money from financial institutions.
This phenomenon has been particularly pronounced in apartment lease transactions. Due to the increased demand for lease properties, security deposits have risen significantly, leading many to choose half-monthly rent to lower deposits. Additionally, as interest rates remain high, more individuals are choosing half-monthly rent instead of borrowing money to pay landlords, resulting in a higher proportion of monthly rent in apartments.
The Ministry of Land, Infrastructure and Transport official remarked, "In the case of apartments, the heightened borrowing thresholds can affect the increase in the proportion of monthly rent. Most cases of individuals receiving lease loans involve apartments, and with it becoming difficult to secure loans last year, demand shifted towards monthly rent." This official added, "Historically, high monthly rent proportions have been associated with high interest rates, while low interest rates favored lease agreements. Following the COVID-19 period and the continuation of high interest rates, the perception of monthly rent being more advantageous has led to its increase."
The proportion of monthly rent in the dwelling lease transaction market is also expected to expand this year. A survey conducted last month by the real estate information platform Dabang among 1,598 users regarding the "2025 outlook for lease and monthly rental markets" found that 59% (935 respondents) anticipate an increase in monthly rent this year. The most common reason for the projected increase is "increased demand for monthly rent" (37%), followed by "interest rate hikes" (24%), "economic downturn" (20%), and "increase in lease prices" (19%).